Egypt Compensates Jordan for Gas Supply Disruption

Egypt is compensating disrupted natural gas quantities to Jordan after several months of export troubles due to attacks on the Sinai-Egyptian pipeline that supplies natural gas to Jordan and Israel, a Jordanian official source told Al-Ahram Arabic-language news website, Wednesday.

The supply between Egypt and Jordan has been interrupted 15 times since 5 February 2011, as Sinai militants have repeatedly blown up the pipeline. Another Jordanian government official, who wished to remain anonymous as he will close the confidential Jordanian-Egyptian supply negotiations, said in a statement to Jordanian weekly newspaper Al-Ghad that the latest agreement with Egypt confirmed the supply will increase to 60 million cubic feet per day.

Signed during Jordon's Energy Minister Alaa Batayneh last visit to Cairo, the agreement also stipulates that additional quantities will be included in the total daily export as compensation for the ongoing disruptions in supplies. The exact amount of the compensation, however, has not been disclosed.

According to the energy minister, natural gas supply average exports last year were estimated at 87 million cubic feet, which is around a third of 2010's exports estimated at 200 million cubic feet. The constant disruption forced Jordan to turn to costlier fuels to meet its energy needs as well as buying electrical power.

This has pushed the state-owned national electricity company close to bankruptcy with a deficit reaching a record high of $3.5 billion. Mean while, Iraq announced it would increase its energy exports to the Kingdom.

Abbas Gawad, Iraqi ambassador in Jordan said in a press statement Wednesday that his country will boost its petroleum exports to Jordan so that it will reach 35,000 barrels instead of the current 10,000 to help the Jordanian government overcome a gas shortage issue.

The Jordanian government continues to partially subsidise electricity at a cost of $5 million a day, pushing the state deficit, already burdened by a multibillion dollar foreign debt, to yet another record high.

The natural gas supply deal signed between Egyptian and Jordanian ministries of energy in 2004, which remains valid until 2019, stipulated that 240 million cubic feet be supplied to the Kingdom daily by Egypt.

Until Egypt's January 2011 uprising, Egypt provided 80 per cent of Jordan's needs for powering electricity plants; the rest is produced through heavy gas oil.

Egypt made changes to the 2004 agreement by raising gas prices from $2.5 to $5 for a million calories for the quantities agreed until 2019. The gas prices will be arranged every two years as per the international market regulations.

Egypt produces six billion cubic feet of natural gas a day, of which 55 per cent goes to the electricity sector, 20 per cent is exported, 13 per cent goes to industries and less than 3 per cent goes to households.