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Jordan, Israel Strike Natural Gas Deal

Amman the first to sign natural gas import agreement with Israel after Egyptian pipeline becomes too unreliable.
By Tova Dvorin
First Publish: 2/21/2014, 9:24 AM

Workers at Israel's Tamar gas field (illustration)
Workers at Israel's Tamar gas field (illustration)
Flash 90

Jordan is turning to Israel for its natural gas supplies, according to Al-Ahram, after Egyptian pipelines have become unreliable. 

Noble Energy, the United States based company that runs the Tamar natural gas field off the coast of Israel, signed a $771 million deal with Jordanian gas suppliers on Wednesday. The Arab Potash company and the Jordan Bromine company will receive the supply over a 15-year period.

Projected revenues from the deal are expected to be high - at least $500 million, according to the most recent reports. 

"The supply will start in the coming two years. The project will reduce the total production cost for Arab Potash by $357 million and for Jordan Bromine by $7.5 million in the first stage of the project," Arab Potash chairman Jamal Sarairah stated to Arabic-language newspaper Al-Ghad

Jordan relied heavily on Egypt's gas pipeline for its energy supply until now, despite ongoing political instability in Cairo.

The gas pipeline in Egypt has been attacked more than a dozen times since the revolution that toppled former President Hosni Mubarak in 2011; constant terror attacks in the Sinai have only escalated since the Egyptian army ousted Islamist President Mohammed Morsi in July.

The instability has become so great that the Jordanian government began holding talks with Israel this summer to become the first Arab country to purchase natural gas from Israel

Earlier this month, Jordanian officials said the disruptions in gas supplies cost Amman at least $1 million per day. According to the Egyptian Cabinet Information Centre (IDSC), Egypt’s natural gas production shrank in December 2013 to 3.3 million tons - down 11.8 percent from December 2012.

"We are aware of the situation in Egypt and they [Egyptians] are aware of our situation in Jordan,” Jordan Prime Minister Abdullah Ensour during a meeting with an Egyptian delegation in Amman, according to Al-Ahram.  “Egypt is to begin gas mega-projects and Jordan has already commenced implementing a natural gas terminal that is expected to be completed by the end of this year to import and store liquefied gas. Egypt then can export its surplus gas from Jordan." 

Israel's natural gas pipeline may also bring other international deals. AFP noted Tuesday that ongoing peace talks in Cyprus, if successful, could lead to an energy deal between Israel and Turkey.