Sinai explosion latest disruption in gas supply

Jordan’s natural gas supplies from Egypt were cut late Sunday in what marked the third act of sabotage on the Arab Gas Pipeline this year. An explosion near Port Fouad in the Sinai Peninsula has disrupted the flow of Egyptian gas to the Kingdom, the latest in a series of events hindering natural gas supplies, according to Minister of Energy and Mineral Resources Khaled Toukan. According to estimates from the Egyptian ministry of petroleum, it will take two days to repair the damage, with pumping slated to resume by the end of the week. Previous attacks resulted in two separate six-week disruptions that forced the Kingdom’s power plants onto their heavy fuel oil reserves at a cost of some $3 million per day. Following an April 27 attack on the pipeline, Cairo insisted on amending a favourable pricing agreement between the two countries under which Jordan received natural gas at prices less than half the international market rate. In a statement on Sunday, Toukan confirmed that both sides will finalise an amended deal, which is believed to bring an end to the favourable pricing structure, following its approval by the Jordanian Cabinet later this month. Also yesterday, Prime Minister Marouf Bakhit held an emergency meeting at the energy ministry to address the issue of Egyptian gas, which Jordan relies on for 80 per cent of its electricity generation needs. During the meeting, Bakhit and Toukan also explored ways to secure additional energy sources ahead of the August peak in electricity demand, according to ministry sources. Egyptian gas supplies have yet to return to pre-attack levels and most recently dropped to 50 million cubic feet per day - well below the 250 million cubic feet stipulated in a 12-year agreement between the two sides. On Monday, Egypt was expected to boost its exports to Jordan to 100 million cubic feet as a first step towards resuming full supply by mid-July. Cairo has come under increasing popular pressure since the January 25 revolution to curb gas exports to Israel and Jordan and prioritise supplies for domestic use. The unreliability of gas supplies from Egypt has forced energy officials in Amman to explore the import of liquefied gas, with plans in place to construct an offshore terminal in the Port of Aqaba by 2013. Amman has received several expressions of interest from international firms in the terminal including Royal Dutch Shell, British Petroleum, Lemont/General Electric and Egyptian firm Al Fijr. The drive for liquefied gas comes as Jordanian officials attempt to cover a five-year gap period ahead of the development of domestic energy sources including solar, wind and nuclear power. Jordan currently imports 97 per cent of its energy needs at a cost of one-fifth of the gross domestic product.