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Jordanian Gas Transmission Pipeline Project JordanianJordanian GasGas TransmissionTransmission PipelinePipeline ProjectProject (Phase(Phase 22 ofof ArabArab GasGas PipelinePipeline Project)Project) Eng. Marwan AL-Baka’in Natural Gas Department Director Ministry of Energy &Mineral Resources Focus on the Euro-Mashreq Gas Market Seminar Damascus ,19th 2008 Arab Gas pipeline In early 2001 the Governments of Egypt, Jordan, Syria and Lebanon signed a Memorandum of Understanding to establish the Arab Gas Pipeline network and agreed that the routing of the pipeline should be Al-Arish – Taba – Aqaba – Amman – Damascus – Homs, and then to Lebanon , Turkey and Europe. The pipeline will be 36” diameter with an ultimate capacity of 10 bcm/yr to allow for development of regional markets TurkeyTURKEY PROJECT SYRIA STAGES BANIAS HOMS ArabArabCYBRUS Gas Gas Pipeline Pipeline Phases: Phases: Third Stage -- OverOver all all length= length= 1500 1500 km km Third Stage - Nominal capacity: 10 BCM/Y Tripoli Rehab-Damascus - Nominal capacity: 10 BCM/Y Damascus-Homs - Turkey Lebanon /Lebanon Border DAMASCUS Second Stage REHAB (36’ , 393km) AMMAN Aqaba/Rehab Arish BORSAED First Stage JORDAN First Stage (36”,265km) Seana EGYPT Aresh/Taba/Aqaba CAIRO Tabaa AQABA Jordanian Gas Transmission Pipeline The Frame Agreement for the Sale and Transportation of Natural Gas from the Arab Republic of Egypt to the Hashemite Kingdom of Jordan was signed in June 2001 The contract was for 30 years (extendable up to 40 years) and included: ¾price. ¾minimum purchase quantities. ¾outline terms for gas purchase The agreement set out the obligations of the Governments of Egypt and Jordan for the supply and purchase of gas, and for the construction of the necessary infrastructure. Jordanian Gas Transmission Pipeline In order to build the required infrastructure in Jordan, the Government of Jordan undertook an international tender to select project sponsors of international standing to finance, build, own, operate and transfer (BOOT) the JGTP. The Government of Jordan recognised the importance of attracting investment into Jordan, and therefore developed an approach which provided satisfactory investment terms for project sponsors Terms for the tender were carefully developed to provide suitable returns for the project sponsors and appropriate sharing of project risk and reward, whilst ensuring that the Government of Jordan would realise significant savings on energy costs To attract investors it was agreed that:- ¾ during an initial 18-year period the project sponsors would have exclusive rights to supply gas to power plants and large industrial users in Jordan. ¾various investment incentives available under Jordan’s Promotion of Investment Law would be provided including fiscal stability, a reduction in the level of income tax and exemption from customs duties. The tender process was won by the EPEG consortium. Jordan received bids from 4 consortia A rigorous assessment of the technical, legal, financial and commercial aspects of the bids was completed, and EPEG was selected Commercial terms for the Licence Agreement with EPEG have been signed 25 January 2004. EPEG is an Egyptian consortium which comprises: – Egyptian Natural Gas Holding Company (EGAS) E – Petroleum Projects and Technical Consultations Company (PETROJET) P – Engineering for the Petroleum and Process Industries (ENPPI) E – Egyptian Natural Gas Company (GASCO) G Role of Project Company. The EPEG Consortium established a Project Company in Jordan (Jordanian Egyptian Fajr for Natural Gas Transmission and Supply) in 2003 which will have the following roles: Finance, build, own and operate the JGTP Purchase gas at Aqaba from the East Gas Company and sell it to power plants and large industrial customers in Jordan Operate the pipeline system and provide transportation services for imported and locally produced gas Develop Jordanian gas markets Accept delivery of transit gas at Aqaba and redeliver at an agreed transfer point for transportation on to Syrian and other downstream markets Summary of the Financing Financial Close was achieved on the JGTP on 7 July 2004. The construction of the JGTP will cost $300 million ¾The project sponsors and other shareholders have paid in $125 Million in equity ¾Housing Bank for Trade & Finance in Jordan is leading a syndicate of 19 regional banks and financial institutions which are lending a total of US$ 160 million ¾$15 million of revenue during construction from gas sales to Aqaba Thermal Power Station will also be utilised The European Investment Bank (EIB) has invested EUR 100 million in the JGTP through a loan to EGAS. EGAS has invested the money partly as debt through its position as Co-Arranger of the loan and partly through equity in the company. The JGTP has progressed rapidly from initial concept in 2001 In 2003, the first phase of the pipeline was completed deliver Egyptian gas to Aqaba Power Station ( 650 MW, Thermal Power Plant). Next phase to deliver gas to North Jordan completed in February 2006. o Completion in 20 months (February 2006) vs contractual target 33 months (April 2007) Power plants running on natural gas represent o Aqaba Thermal Power Station (650 MW) o Rehab combined cycle (300 MW) . o Samra combined cycle (300 MW) : (Phase 1) o Samra Simple Cycle (2 × 100 MW) will be converted to combined cycle (Phase 2). o First IPP (Esat Amman) Simple Cycle (2 × 123 MW) will be converted to combined cycle. o New power stations will be gas fired with diesel back-up Establishing new gas distribution networks in Jordan :- Ring Main e r Medium Pressure u s Gas s e r Distribution P Network h (Commercial & ig Residential H Customers) P Citygate T Low Pressure G (pressure let- J down) Medium & Small Industrial Customer Medium Pressure Gas distribution networks for smaller customers will be developed. –RFP documents for Amman and Zarqa was issued in May 2006 and Fajer offer was received in September 2006. –MOU for gas distribution in Aqaba signed in May 2005 between Fajr and Aqaba Development Company including CNG filling station for cars approved. Gas Demand Forecast Regional Markets There is also potential for regional gas markets The pipeline is 36” diameter with an ultimate capacity of 10 bcm/yr to allow for development of regional markets Pipeline capacity will be developed in increments through the addition of compression to match gas market development The next phases of development will extend the pipeline to Syria ( construction Southern part of Phase 3 from Jordan/Syria Borders till Homs 36”, 310 Km ,completed in February 2008) Additional markets for gas in Turkey and Europe may be developed later Project Benefits The JGTP is a sound commercial venture which offers significant benefits for all parties Jordan ¾Gas will lower Jordan’s total energy costs ¾Enables development of electricity sector with efficient combined cycle gas turbines ¾Facilitates elimination of some fuel subsidies. ¾Improves environmental performance – reduced burning of high sulphur fuel oil ¾Reduces fuel supply risk – diversification from dependence on oil and oil products ¾Makes Jordan part of regional gas network. Egypt ¾The JGTP provides a route to commercialise Egypt's gas reserves ¾The project opens up regional gas markets Project Company ¾ The project provides an attractive commercial return ¾ There is very considerable upside with development of Jordanian and regional gas markets.
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