Energy to Jordan
(Last updated: 24 Aug 2011)
Trends and opportunities
The market
Jordan’s energy sector will undergo major modernisation in the coming 10-15 years, with the approval of Jordan’s Energy master plan by the cabinet. This will result in the injection of around A$3.3 billion of public and private sector capital. This plan covers all the activities of the sector including:
- the utilisation of natural resources
- electricity tariff levels energy demand
- power sector development
- gas distribution
- oil refining
- renewable energy and regulatory reform
Under the first phase, Jordan will call for international investment in new power generation, gas distribution and the restructuring and reform of the refined products sector.
Even though Jordan is poor in natural resources compared to its neighbours the electricity sector has sustained growth (five per cent on average) with services covering 99 per cent of the country. Currently the total installed capacity stands at 1,636MW generated by eight plants. These plants are fired by a combination of natural gas that is imported from Egypt, HFO and diesel. To-date power generation has been managed by the Central Electricity Generating Co.
Natural gas
Currently, 80 per cent of Jordan’s electricity is generated using natural gas imported from Egypt. Jordan has a small site, Risha (21 million cubic meters) and in October 2010 an agreement was signed with British Petroleum for the operation and development of this site. It is hoped that with this agreement production will increase to between 330 and 1000 million m3/day.
The government estimates that it will take US$2.461 million in the period 2007-2020 to develop the sector. This includes a number of projects:
- Gas distribution network for Aqaba and Zarqa
Estimated cost: US$400 million (in the first 10 years of the project)
- Supply to the new central Samra and substaion fo Amman East
Work to be done by the Jordanian-Egyptian Fajr Company (estimated cost: US$6 million)
- Supply industries and power plants
Work to be done by the Jordanian-Egyptian Fajr Company (estimated cost: US$65 million)
- Rehabilitation of 30km of Arab gas pipeline
Awarded to the Jordanian-Egyptian Fajr Company (estimated cost: US$30 million)
- Site development Risha (estimated cost: US$1.960 million)
Oil
Jordan has only one refinery with a capacity of 14,000 tonnes per day. At present there is a project to expand these facilities, increasing capacity to 17,000 tonnes per day and improving the quality of production. The cost of this expansion is around US$1.500-$2.000 million.
The Jordanian Petroleum Refinery Company (JPRC) contacted a shortlist of 15 companies to submit expressions of interest in the expansion project. The submission period ended on 27 November 2009 and results are pending.
Oil shale
The shale is argillaceous metamorphic rock. Colloquially, we might say that rocks are soaked in oil containing between 75 and 125 litres of oil per tonne. The study quantifies the domestic supply of this component at 40,000 million tonnes. The National Energy Strategy aims to realise oil shale contributions of up to 17 per cent of the country’s energy mix by 2020. The investment required to realise this would be US$1,400-$3,800 million.
The government's negotiations to exploit these deposits are based on three projects:
- Shell Project
The Government signed a Concession Agreement with Shell to evaluate, develop and exploit the deeper reserves through In Situ Conversion Process (ICP) technology. Phase 1 of this project, dedicated to feasibility studies and a pilot project, is due to be completed in 2020. According to the results, a decision on the commercial viability of the project will be undertaken. Implementation of a commercial project would require an investment of between US$15 and $20,000 million. If it was to proceed it could be operational in 2021 and would be financed under a BOO arrangement.
- Surface reserves
The Government has signed MOUs with several companies to conduct feasibility studies in different parts of the country. Commercial production estimates are around 30,000 b/d.
- Oil Shale Power Generation
A framework agreement was signed with the Estonian company, Eesti Energia to build a plant for generating energy from the combustion of oil shale. Under a BOO scheme, the plant will have a capacity of 600-900 MW and will be operational in 2015.
Jordan is interested in developing all its available sources of energy, including renewables – a comprehensive plan for renewable energy has been prepared. Three sources are being used right now, wind, solar and biogas.
The two established wind plants are producing 3gw/h. Solar cells are being used to provide power to a number of remote villages in Jordan. Several studies have been carried out in this field relating to installing and operating seven solar power measuring stations and carrying out research solar powered desalination.
With respect to biogas energy, Jordan Bio Gas Company is operating a biogas factory at Rusaifaeh dump producing electricity and fertiliser. Expansion is under way to increase the total capacity of the factory and production is projected to be 3300MW per hour.
Uranium and nuclear energy
Uranium
Uranium and phosphate reserves are located in two per cent of the world. In July 2009, the Jordan Phosphate Mines Company ordered a study on the exploitation of uranium in phosphates in Jordan, where reserves are estimated between 60 and 100,000 tonnes. An additional 140,000 tonnes of conventional uranium has been identified in Jordan.
Jordan French Mining Company
In December 2009, the Jordan Atomic Energy Commission and AREVA signed a MoU for exploration and exploitation of uranium mines. This resulted in the establishment of the French Jordanian Mining JV Company which is targetting extraction of uranium in the Midwest area of Jordan. Work will begin in 2011 and exploration and extraction will begin in 2012-2013. The budget is US$625 million – $40 million provided by AREVA for exploration work, who are undertaking 33 per cent of the works self-financed, while the remaining 67 per cent of funding will come from international banks.
There is interest from other companies in the exploration and exploitation of reserves in the North and South of Jordan.
Peaceful nuclear program
It has been decided that a Generation III reactor with a capacity of 1GW will be the model of nuclear reactor built in Jordan. Belgium's Tractebel Engineering, responsible for choosing the exact location of the reactor, announced in April 2010 the site for the first reactor pending environmental impact studies. The plant will probably be located 100 km North East of Amman. The project budget estimate is US$4,500 million, with 30 per cent funded by strategic investors and 70 per cent by government. Depending on funding the development of two additional reactors in parallel is possible. Work on construction of the first reactor is scheduled to begin in 2013 and the date of commissioning is proposed as 2020. With plans to build four nuclear plants within 30 years, the Jordanian nuclear program aims to provide 35 per cent of Jordan’s energy needs.
In March 2010, the Korean consortium DAEWOO - KAERI signed a US$130 million deal for the construction of a small-scale medical reactor (5 MW) at the Jordan University of Science and Technology (JUST). This reactor will be used for the training of Jordanian nuclear engineers and related staff. DAEWOO will design and build the reactor while the Korean Atomic Energy Research Institute (KAERI) will deliver the training. Work is scheduled to commence in 2011 and be completed by 2015.
Market drivers
Security and political stability – Jordan has good relations with all its neighbours. It has maintained continuous stability, moderation and security in a region prone to volatility. Jordan is a fourth generation monarchy with consistent and continuous foreign and internal policies, a democratically elected Parliament and a visionary leader dedicated to progressive reforms of political, economic, fiscal, legal and social significance.
Strategic position – Jordan is well situated as a regional entry point, being well connected to neighbouring countries and global markets through modern transportation and communication networks. Jordan’s location allows for diversification and expansion into increasingly affluent markets. Trade agreements give Jordan access to markets of more than one billion consumers.
Skilled workforce – From executives to skilled labourers, Jordan is educating for the 21st century. Many Jordanian engineers and professionals are working in the GCC and internationally. Local labour costs remain the most competitive in the Middle East.
Favourable business environment – Jordan is a free market oriented economy, with outward-oriented economic policies and a private sector-led approach. Jordan has experienced ongoing privatisation of major state-owned enterprises and implemented significant advances in structural and legal reform.
Opportunities
Services opportunities
Construction, project management and specialist sub-contracting, specialist services to sectors of power, light, passenger and freight rail, roads and ports, transport and logistics, water and wastewater management, green building, facility management and renewable energy.
Product opportunities
Products for water management, water saving and wastewater management, a wide variety of building materials and products including sustainable solutions, systems for rail and ports, building automation, air-conditioning and security, solar and wind solutions and swimming pool equipment.
What makes Jordan an attractive place to do business?
- Well-educated, professional and highly skilled labour force.
- An economy driven by regional and international investment, youthful population, well-established and managed banking system, excellent infrastructure and a sophisticated business community familiar with Western practices.
- Australia's profile in Jordan is high. There is increasing recognition of Australian companies and capabilities. Several companies have opened a presence in Jordan as a regional base for the Levant and Iraq market.
- Stability and transparency.
- Modern communications infrastructure and good financial services.
- Wide use of English (as well as Arabic) in business.
- Favourable exchange regulations and import regulations.
- A free-market oriented economy, advanced judiciary and communications system, and well-regulated capital market.
Marketing your products and services
Market entry
How Austrade can help with market entry
Jordan, with its growing project portfolio and import propensity presents significant opportunities for Australian businesses in the infrastructure, building and construction industry. However, the relative challenges in qualifying partners or customers and different business culture makes it difficult for Australian companies to identify the most suitable contacts and secure appointments.
Austrade's experienced Business Development Managers are members of relevant building sector business groups. They are well connected with key business people and able to open doors on behalf of Australian companies. Austrade arranges appointment programs for companies making individual visits.
There is a big difference between the commercial laws in Jordan and Australia, which if not understood by Australian companies, can result in decisions which impede the growth of business. It is very important to understand the legal context. Austrade provides information about agency/distribution and franchise regulations and the different types of commercial entities open to Australian companies.
Austrade can also refer Australian companies to providers of professional services, such as lawyers and accountants.
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.