Jordan also has seen strong economic growth over the last year, after a modest slowdown in 2003 due to the disruption of trade as a result of the war in Iraq. Real GDP growth was 7.5 percent in 2004, and is forecast at 6.1 percent for 2005. The one major problem Jordan faces in the near-term, though, is the loss of subsidized oil supplies from Iraq. Kuwait and Saudi Arabia had provided discounted oil as a stopgap measure through 2004, but Jordan now has to purchase oil at world market prices, which has been a drain on the countrys current account balance. Strong growth in exports, however, as well as increased remittances from Jordanian workers in the Persian Gulf region, have offset this effect.
Jordan has no significant oil resources of its own, and must rely on imported oil for all of its needs (around 106,000 bbl/d -- in 2004). The March 2003 invasion of Iraq has caused major changes in Jordans energy supply situation. Prior to the war, Jordan had received supplies of crude oil from Iraq -- half free of charge, and half at prices significantly below market levels. The country also received around 20,000 bbl/d of refined petroleum products from Iraq. In the absence of a functioning pipeline, all of the oil supplied to Jordan by Iraq had been transported by trucks.
In the wake of the war, Jordan has had to seek alternative sources of supply, both Kuwait and Saudi Arabia emerging as Jordans main oil suppliers since 2003. Press reports indicated that at least some of this oil was sold at discounted prices through the end of 2004, and that Jordan has been paying the full market prices in 2005. Meanwhile, Jordan has sharply raised the retail prices charged to consumers for petroleum products.
Jordan has one refinery, at Zarqa, with a capacity of 90,400 bbl/d. The facility is in need of major upgrades, and its owner, the Jordan Petroleum Refining Corporation (JPRC), currently is studying its options. The facility was designed to produce a product mix skewed toward heavy fuel oil, which was needed at the time it was built to run electric power plants, but the local market is now in need of additional gasoline and diesel, while electric power generation is switching over to natural gas.
Jordans state Natural Resources Authority (NRA) has been promoting oil exploration within the country, which has been relatively unexplored until now. TransGlobal Corporation holds a concession for the Wadi Araba area in Western Jordan. Sonoran Energy of the U.S. was awarded exploration rights for an area near Amman in December 2004. Other small independent companies have conducted surveys of other areas as well, but without yet finding commercial quantities of oil. To help attract foreign investment, the Jordanian government has plans to privatize its oil sector. In October 1995, the country set up the state-owned National Petroleum Co. (NPC) to handle upstream oil and gas exploration and development. In mid-1999, NPC divested its oil-drilling operation, which now operates as Petra Drilling Company. NPC is still active in the natural gas sector.
Jordan has modest reserves of natural gas, 230 billion cubic feet (Bcf), and has developed one gas field, at Risha in the eastern desert near the border with Iraq. The current output of around 30 million cubic feet per day (Mmcf/d) from the Risha field is used to fuel one nearby power plant, which generates about 10 percent of Jordans electricity.
In August 2003, Jordan began imports of natural gas from Egypt. In May 2001, a 30-year agreement had been concluded with Egypt for gas sales to begin at a rate of 100 Mmcf/d beginning in 2003. Construction of the section of the pipeline in Egypt began in late 2001, starting from the existing pipeline terminus at El-Arish in Sinai. This section was completed in mid-2003, allowing deliveries to begin to one power plant at Aqaba. The second phase of the project, which will connect to the Rihab power plant in northern Jordan, is currently under construction and scheduled for completion by then end of 2005.
Arab governments also have been discussing the potential of extending the Egypt-Jordan pipeline and increasing its capacity - dubbed the Arab Gas Pipeline (AGP) project. The extensions under discussion include links to Syria and Lebanon and an extension to Turkey. At present, though, it seems unlikely that an extension to Turkey will be built in the near term.