Jordan plans new refinery using Iraqi piped crude

Jordan wants to build a refinery at Aqaba to process Iraqi crude from a planned pipeline linking Basra to the Red Sea-facing port, as the country aims to reduce its energy imports by 2020, its oil minister said yesterday.

“Currently the refinery [at Zarqa] is being upgraded. If there will be a pipeline from Iraq, we will be looking to build a new refinery in Aqaba,” Hala Zawati said. “[We’re building] another one so that white product [turpentine] can be immediately exported through Aqaba.”

She did not provide details on the cost of building the project.

The Jordanian cabinet in February approved a million barrel per day pipeline that sources oil from southern Iraqi fields in Basra. The country is currently undertaking a $1.6 billion expansion of its sole refinery at Zarqa to boost capacity to 120,000 barrels per day.

Ms Zawati said that of the million bpd transported via the planned pipeline, Jordan’s consumption would be around 150,000 bpd.

“[The Iraqis] are excited today about the pipeline as they were excited before, but the political situation did not allow for that to materialise, but we hope that they will mobilise on this project. There will be talks very soon. Jordan cannot use all the capacity of the line,” she said.

Jordan had already begun importing Egyptian gas on an “experimental basis”, with plans under way to increase the offtake in 2019. “There are negotiations on how much will be pumped and we hope that one-third of the country’s requirements will be taken from Egypt,” said Ms Zawati.

The country’s natural gas consumption would be about 350 million cubic feet a day, much of it met through the liquefied natural gas terminal in Aqaba, as well as from Egyptian gas.

Construction of the pipeline sourcing gas from Israel’s massive Leviathan field is ongoing and would become “operational in 2020”, she said. “It depends on the development of the field and the readiness of Israel to export,” said Ms Zawati.

Tel Aviv and Amman, which have a peace treaty, agreed to transfer $10bn worth of natural gas via a 65km-pipeline from Israel. Once operational, the gas will be connected to an existing line in Mafraq, and then distributed to the kingdom’s power plants.

Jordan’s fiscal balance deteriorated as a result of its import bill and dwindling grants after oil prices slumped in 2014. In June, the UAE, Kuwait and Saudi Arabia extended a $2.5bn aid package to the kingdom to help stabilise its economy.

The country’s unemployment stands at 18.7 per cent of the population, according to rating agency Moody’s. External debt is equivalent to about 72 per cent of gross domestic product, and the country’s economy expanded 2 per cent in 2017.

Earlier in 2018, Jordan suffered its biggest protests in years, prompted by price hikes, subsidy cuts and other fiscal measures taken by the government to reduce debt.

The country will also look to reduce its energy imports to 84 per cent from 95 per cent by 2020, according to Ms Zawati who cited increased activity in the kingdom’s oil shale programme.

“We will be going from 95 per cent of energy imported today to 84 per cent in 2020, and this is dependent on projects currently being built on the ground,” she said.

Jordan, according to the World Energy Council, has the world’s eighth largest reserves of oil shale, which is not to be confused with shale oil. It is formed of organic fine-grained sedimentary rock, from which oil can be extracted through heating. The kingdom wants to lessen the burden of energy imports that continues to widen its fiscal deficit.

Ms Zawati revised up Jordan’s oil shale reserves to fourth-largest in the world.

Jordan’s fiscal balance deteriorated as a result of its import bill and dwindling grants after oil prices slumped in 2014