Jordan to Connect Power Grid With Saudi Arabia With Aim to Stop Reliance on Foreign Fuel by 2030

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Jordan's King Abdullah II, right, talks to Saudi King Salman in Mecca, Saudi Arabia, June 1, 2019.
Jordan's King Abdullah II, right, talks to Saudi King Salman in Mecca, Saudi Arabia, June 1, 2019.Credit: Amr Nabil/AP

Saudi Arabia and Jordan signed a memorandum of understanding last week to connect the two countries’ electric grids by means of a 164-kilometer line between them, according to foreign media outlets. The agreement is intended to free Jordan from independence on foreign fuel sources by 2030, the journal IJ Global reported.

The line will go through Kuwait and northern Saudi Arabia to the eastern part of Amman.

For the Saudis, the project is part of a broad plan to become the region’s largest exporter of electricity, based mainly on renewable energy, IJ Global said.

The Jordanian energy minister said that the agreement is part of a strategic plan for Jordan’s energy sector for 2020–2030. She added that the project will bring stable electricity to both countries. The Saudi energy minister said that the project has been launched as part of the kingdom’s Vision 2030 plan.

An aerial view shows the foundation platform of Leviathan natural gas field off the coast of Haifa, Israel January 31, 2019.Credit: Marc Israel Sellem/Pool via REUTERS/File Photo

In the past Jordan has relied on the import of natural gas for electricity production from Egypt and Qatar, and beginning in 2020 it began importing gas from Israel’s Leviathan field. Jordan signed an agreement to import 3 billion cubic meters of natural gas annually from Leviathan for a period of 15 years. At present, the Jordanians are paying almost $6 per thermal unit. According to past reports from foreign sources, Jordan can annul the agreement, but will have to pay penalties – $1.5 billion for the first five years and $800 million from the fifth year to the eighth year, and $400 million after the 10th year.

Jordan purchases gas from Leviathan for its national electric corporation (NEPCO) and also purchases smaller quantities of gas from the Tamar field for its bromide and fertilizer industries at the Dead Sea. As far as is known, the United States has granted the Leviathan consortium – led by Noble Energy, which actually signed the export agreement – guarantees for payment of Jordan’s commitments. The United States also gave Noble Energy guarantees for implementation of the agreement; thus, if NEPCO defaults on payment or on implementation of the purchase deal, the U.S. government would be able to transfer to Israel some of the financial assistance it gives Jordan.

The natural gas agreement between Jordan and Leviathan was greeted with broad popular opposition in Jordan. In fact, since 2016 a group opposed to the agreement has been leading a campaign against the agreement in Jordan. The group includes labor unions, opposition parties and lawyers. The opponents of the agreement have also turned to the courts to “stop any legal agreement and deal associated with the contract ... ; voiding all purchases of land for the project, so that all land confiscated for this purpose will be returned to its owners; as well working toward the government’s cancellation of this deal – without payment of penalties.”

Nevertheless, the Jordanian court approved the gas import deal and in fact, gas has been flowing to Jordan continually since the beginning of 2020. In the first half of 2019, $560 million worth of gas from the Leviathan field has been sold – mainly to Jordan and Egypt. In the second quarter, the Leviathan consortium sold 1.4 billion cubic meters of natural gas, and from the beginning of 2020, the partners sold 4 billion cubic meters.

A statement from sources close to the Leviathan consortium said: “Israeli gas has been flowing continuously in significant quantities to countries in the region. With reference to the matter at hand, the memorandum of understandings states that Jordan and Saudi Arabia will link their electric grids for mutual backup. Although this is a preliminary stage, and it will take many years until it is realized – when it is realized it is expected to increase the demand for electricity in Jordan.”

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