Jordan to sign new gas deal with Egypt

Egyptian gas generates 80% of Jordan’s electricity and the switch to fuel oil and diesel has cost it $4.2 million a day.

August 30, 2011 07:31
1 minute read.
Egypt gas pipeline after attack in Sinai [file]

Egypt Pipeline Explosion 311. (photo credit: REUTERS)


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Jordanian Minister of Energy Khaled Toukan has announced that Jordan will sign a new natural gas agreement with Egypt in September, according to an AP report released on Sunday. He said that while several attacks this year on Egypt’s gas pipeline prompted Jordan to look for alternatives, it is now trying to use Egyptian gas to meet its energy needs.

Toukan added that Jordan will pay more for the Egyptian gas, but he declined to say by how much.

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Egyptian gas generates 80% of Jordan’s electricity and the switch to fuel oil and diesel has cost it $4.2 million a day.

Egyptian media reported in June that Jordan had agreed to pay $6-7 per million British thermal units (BTU) of natural gas, which the media claims is the global market price, up from the current $3 per million BTU. Jordan has two long-term gas contracts with Egypt, including one at the heavily subsidized price of $1.50 per million BTU. The new deal applies to the second contract, which covers a small amount of Jordan’s gas purchases.

An Israeli source told “Globes” in June that the weighted price for the two contracts is less than Israel pays Egypt for gas delivered by East Mediterranean Gas Company (EMGC).

The prices mentioned in the Egyptian media are actually the retail price paid by Jordanian customers, not the wholesale price that Jordan will pay the Egypt National Gas Company (EGAS). Both Jordan and Israel do not buy gas directly from the producer, but through middlemen – EMGC in the case of Israel, and Jordan through Al-Sharq Gas Company.

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