The Iraqi government has approved an agreement paving the way for the construction of a long-awaited gas pipeline to Jordan.
The Iraqi prime ministry approved a year-old memorandum of understanding last week, under which Amman and Baghdad will begin the initial planning of a several-hundred-kilometre pipeline to carry heavy oil and natural gas to the Port of Aqaba, according to an energy official.
A portion of the natural gas to be transported via the pipeline will be supplied to Jordan at a price to be set by the two governments at a later stage.
According to the agreement, Iraq will also supply the Kingdom with heavy oil, a measure that will depend on feasibility studies regarding the ability of the Jordan Petroleum Refinery Company to process Iraqi crude.
With the signing of the agreement next month, Amman and Baghdad will launch the first of a series of biannual ministerial steering committees and regular technical reviews, according to Minister of Energy and Mineral Resources Alaa Batayneh. Although seen as a “welcome development”, energy officials acknowledge that the pipeline, which will require five years to build, will not solve the immediate energy woes of Jordan, whose energy bill has risen by some $5 million per day due to rising oil prices.
The import of Iraqi gas is one of several proposals currently being studied by officials to address a several-year “gap” ahead of the development of local energy sources such as oil shale, solar and nuclear power. The Kingdom is also exploring the import of gas from Qatar, with an official Qatari delegation due to arrive in Amman on Tuesday for the launch of a series of advanced talks with officials over a gas deal.
The push for alternative energy sources comes amid ongoing disruptions in the Kingdom’s Egyptian gas supplies, which are currently at 10 per cent of their capacity of 300 million cubic feet and which have pushed Jordan’s national energy bill to a record JD4 billion.
In response to rising energy costs the officials claim are a main driver behind the Kingdom’s near record JD2.9 billion budget deficit, the government introduced new electricity tariffs earlier this month, raising rates as high as 150 per cent across various sectors.