Surrounded by regional crises, Jordan’s greatest challenge remains its chronic energy woes, with officials racing to develop local alternative resources to reign in skyrocketing electricity subsidies.
With few natural resources, Jordan has long been heavily reliant on external energy sources, importing some 98 per cent of the fuel needed to generate electricity, at a cost of nearly one-fourth of the gross domestic product.
After cuts in the country’s Egyptian natural gas supplies forced Jordan to rely on costlier heavy oil imports that drove electricity subsidies to over $1 billion, the issue of the country’s energy independence was thrust to the forefront of the policy debate.
With a $4 billion national energy bill placing an increasing strain on the Treasury, decision makers are now rushing to revive a 2007 energy strategy designed to boost reliance on domestic energy sources over several years before the country’s energy crunch escalates to a wider national crisis.
Faced with soaring energy costs driving the state-run National Electric Power Company’s generation costs to 163 fils per kilowatt hour (kwh), over twice the 63 fils per kwh it sells to consumers, the government has rushed to implement a series of projects to develop alternative energy resources over a 20-year period.
Central to Jordan’s energy independence drive is the country’s vast oil shale reserves, which official estimates place between 40 and 70 billion tonnes.
Under the national energy strategy, oil shale is to account for 15 per cent of the country’s energy mix by 2020, prompting authorities to push along several projects set to generate over 1 gigawatt in electricity.
Tempted by Jordan’s potential, several international firms are laying the foundations of the country’s oil shale industry, establishing a series of oil shale exploration, production and power plant projects across the Kingdom.
The most ambitious of the initiatives is a joint production/oil shale-fired plant project in central Jordan, under which a consortium headed by Estonain state-owned Eesti Energia hopes to produce up to 35,000 barrels of shale oil (bps) per day by 2020.
Under the project, the consortium is set to construct two thermal fire plants with a combined 500 megawatt (MW) capacity by 2017, making the plant the single largest electricity generator in the country with the potential to shave nearly JD350 million from the national energy bill.
Attarat Power Company, Eesti Energia’s subsidy in Jordan, is currently vetting six tenders from French, Korean and Chinese firms to carry out the project, with construction to commence in 2014.
Meanwhile, Karak Intl., a joint British-Jordanian firm, is embarking on a project to produce up to 15,000 barrels of shale oil per day (bpd) in the southern region of Lejjun — a number the firm hopes to raise to 20,000bpd by 2020.
On the longer term, officials are eyeing the development of oil shale reserves in the northeast Jordanian desert near the Iraqi border, where shale deposits are several metres below surface and heavy rock sediment.
Under a 20-year multibillion-dollar initiative, Royal Dutch Shell is finalising preliminary studies to utilise its in situ conversion process to heat the desert plains over several years and extract the shale deposits in liquid form.
Should the exploratory phase deem the project feasible, Shell hopes to produce up to 40,000bpd by 2020.
Home to one of the highest solar radiation rates in the world and over 330 days of sunlight, Jordan has been a natural candidate for a national solar power industry.
With the drop in Egyptian gas supplies and ballooning electricity subsidies driving the budget deficit past $1 billion, officials pushed through several pieces of legislation and regulations streamlining energy investment procedures, providing tax incentives for renewables and allowing citizens to sell electricity back to the national grid for the very first time.
After years of delayed tender processes pushed back construction dates of the country’s first wind and solar power plants, Jordan passed groundbreaking legislation in 2012 allowing the Ministry of Energy to negotiate directly with international firms — opening the floodgates to dozens of small- and medium-scale renewable energy projects across the country.
Since passing the legislation, the ministry has signed 30 memoranda of understanding with local and international investors to establish up to 1,000MW in wind and solar power projects across Jordan.
By 2014, the country’s first large-scale wind farm, with a 117MW capacity, is set to be online while the country’s first solar power plant, a 10MW facility, is set to be built in the northern city of Mafraq, 80km northeast of Amman, by 2015.
Meanwhile, Amman resident Suleiman Nimri made history in November 2012 by becoming the first Jordanian citizen to sell electricity back to the national grid as Amman introduced a long-awaited net-metering.
Since introducing regulation allowing private citizens and firms to sell backup to 5MW worth of electricity production to distribution companies, some 200 households have joined the ranks of the new solar entrepreneurs.
In order to diversify its domestic sources, Jordan has also accelerated efforts to expand production at the Risheh gas fields in the eastern desert along the Iraqi border — reserves experts say have yet to be fully exploited.
British Petroleum is also planning to expand the wells production from current levels of 35 million cubic feet (mcf) per day to over 100mcf.
The drive for alternatives come as the fate of Jordan’s most ambitious energy project — an initiative to establish up to four 1,000MW nuclear reactors by 2030 — has come into doubt.
As various site issues forced officials to change the proposed location of the country’s first planned reactor from the shores of Aqaba to the northern city of Mafraq and then to the eastern desert — local communities across the country have raised objection to the proposed plant.
Meanwhile, the Jordan Atomic Energy Commission (JAEC) announced last month that it plans to abandon a multi-year-long tender process for a nuclear reactor, opting instead to select a strategic investor in the project.
In a report issued in late April, Nuclear Intelligence Weekly quoted JAEC Vice Chairman Kamal Araj as saying that officials are to suggest to the government to select a strategic investor to share the financial risk involved in the project rather than select from two short-listed reactor vendors.
In April 2012, Jordan narrowed its short list of potential vendors to Russian AtomStory Export and a consortium comprising French firm AREVA and Japanese Mitsubishi Heavy Industries.
It is unknown how the decision will affect the two bids.