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Jordan's lawmakers approve draft law to ban Israeli gas imports: reports

Highlights

Supplies from Leviathan started on January 1

Concern over Jordan's dependence on Israeli gas

Jordan became LNG importer in 2015

London — The parliament of Jordan has voted to approve a draft law that would ban natural gas imports from Israel.

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According to local media reports, the parliament voted to ban the imports amid concern that Jordan would become too dependent on gas from its neighbor and civilian protests against buying gas from a country considered by some as an enemy state despite a 1994 peace treaty.

Gas exports to Jordan from the giant Leviathan field -- operated by US company Noble Energy -- started on January 1 under a 2016 agreement with Jordan's state-owned utility NEPCO.

The agreement -- for the supply of 45 Bcm of gas over a 15-year period -- came into force with the start of gas production from Leviathan on December 31, 2019.

Small gas exports from Israel's Tamar field -- also operated by Noble -- to Jordan began in 2017 under a deal signed in 2014 to supply 1.8 Bcm over a period of 15 years to Jordan's Arab Potash Company and the Jordan Bromine Company.

But it was opposition to the much bigger 2016 deal with NEPCO that triggered widespread protests by locals angry at what they see as Amman also providing financial support to the Israeli government.

The 2016 deal was not referred to the parliament in Jordan for its approval at the time.

An industry source told S&P Global Platts on Monday the vote could be simply a "declarative statement" by the parliament in consideration of the protests, adding that lawmakers do not have the authority to implement a ban on Israeli gas imports.

The source said the gas agreement between Noble and NEPCO was implemented and no change was expected in that regard.

Government stance

The Jordanian government has said in the past that the matter was commercial, not political and, according to media reports, was not expected to approve the draft law.

It has said previously that imports from Leviathan would improve the country's energy security.

Noble could not be reached for immediate comment Monday on the approval of the draft law, while its partner at Leviathan and Tamar -- Israel's Delek Drilling -- declined to comment.

The vote came days after energy ministers from across the East Mediterranean -- including Israel and Jordan -- met to finalize the founding framework of a new forum to promote regional cooperation in the gas sector.

Ministers from Egypt, Cyprus, Greece, Israel, Italy, Jordan and the Palestinian National Authority met in Cairo for the third time since January 2019 to cement the creation of the East Mediterranean Gas Forum (EMGF).

The forum will serve as a platform for establishing a structured dialogue on gas, "setting an agenda for formulating common strategies and regional gas policies based on a shared vision and supported by government cooperation."

Egyptian exports

Jordan historically relied on imports of gas by pipeline from Egypt, but supplies were halted in 2012 as Egypt diverted gas exports for domestic use after the Arab Spring.

To cover the loss, Jordan started importing LNG in mid-2015 after the installation of an FSRU at Aqaba.

Egyptian supplies to Jordan then resumed in late 2018 after the Eni-operated Zohr gas field ramped up production, freeing up more Egyptian gas for export.

According to data from S&P Global Platts Analytics, Jordan's LNG imports totaled 1.9 Bcm of gas equivalent last year, with Egyptian deliveries and the small imports from Israel therefore likely to have made up the remaining 1.6 Bcm of Jordan's annual gas demand of some 3.5 Bcm/year.

Jordan is keen to move further away from oil-fired power generation and wants to increase the share of gas in its power generation mix.

Its immediate reaction to the suspension of Egyptian imports was to import more fuel oil and diesel for power generation.

To date, Jordan mostly imports LNG from Nigeria, Qatar and the US.

Other suppliers have included: Angola, Algeria, Australia, Egypt, Equatorial Guinea, Norway, Oman, Trinidad & Tobago and the UAE.