Israeli Gas Comes into Play as Jordan Books FRSU to Fill Egyptian Supply Gap

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Norway's Golar LNG (NASDAQ:GLNG) (Hamilton, Bermuda) has been selected by the Jordanian Energy Ministry as the preferred bidder to supply a 3.5 million-ton-per-year floating storage and regasification unit (FSRU). Negotiations will take place to conclude the lease agreement, and the contract should be signed by the end of March. Excelerate Energy (The Woodlands, Texas) was selected as the second-ranking bidder.

The terminal will have an initial base-case send-out capacity of 4.2 million cubic meters per day (150 million cubic feet). The capacity could possibly increase to a send-out of 14.2 million cubic meters per day. The Energy Ministry plans to launch the tender for LNG supply to the facility within the next two months and aims to start imports in the second half of 2014.

Marwan Bakain, the director of the country's natural gas department, said that Jordan's gas shortage is growing. A contract with Egypt should deliver 7.2 million cubic meters per day, but Cairo is challenged with its own gas crisis and Jordan only receives 50% of the contracted volume.

Looking to the future, Jordan is seeking opportunities to import gas by pipeline from Iraq and boost domestic production at the Risha gas field, where BP plc (NYSE:BP) (London, England) is in the fourth year of a five-year appraisal program. But, Baikan said, the quick solution was to meet demand with LNG to mitigate any problem presented by the lack of adequate Egyptian supplies.

Industrial gas users in Jordan have initiated discussions on the possibility of importing East Mediterranean gas, as Israel prepares to start gas production at the 254 billion-cubic-meter Tamar field in April. The Arab Potash Company (APC), based 110 kilometers south of the capital Amman, is in negotiations with the Tamar partners to import gas from the field, according to local reports. Currently, the discussions are only between companies and there is no involvement from the government, according to Bakain.

Neither Delek Energy, a 31.2% shareholder in the Tamar consortium, or APC were available to comment on the negotiations. But Interfax reports a consultant on the ground said that the project was economically viable and required only a small extension to Israel's existing grid network. "A pipeline to the potash plant in Jordan from the Israeli Dead Sea works, which is only a few kilometers, would only cost a few million dollars," he said.

Dead Sea Works, operated by Israeli Chemicals, signed a contract with the Tamar consortium at the end of last year for the supply of 500 million cubic meters of gas between 2015 and 2017, to feed a new power plant it is developing.

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