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Israel Set to Export Gas to Jordan in Landmark Deal

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A deal is in the works that will make Israel an energy exporter for the first time in history.
A deal is in the works that will make Israel an energy exporter for the first time in history.
Israel is set to become a gas exporter as a deal is in the works with Jordan, according to the Wall Street Journal. A drilling consortium that is developing Israeli offshore natural-gas fields is close to a deal between the two nations, although a politically sensitive one, according to the Journal, in a move that takes Israel one step closer to being an energy exporter for the first time in its history. The reported deal will involve extending a gas pipeline from an Israeli chemical plant to a location in Jordan, across the Dead Sea.

An Israeli official told the Journal that a deal could be just weeks away. Another person familiar with the talks, Oded Eran, Israel’s former ambassador to Jordan, said “an agreement in principle has already been reached, but both sides are still haggling over pricing and other technicalities,” the Journal reported.

“It’s very close,” Eran reportedly said.

The deal is said to be small in terms of commercial value but it could also open a major economic link between the countries, thus providing a starting point to a larger pipeline arrangement between Israel and Jordan..

For Israel it would carry outsize symbolic significance. Since its founding decades ago, Israel has struggled with a lack of energy reserves in a region full of energy-rich and hostile neighbors.

According to the Journal, a senior Egyptian official familiar with the country’s gas agreement has said that Jordan has informed them it is close to signing the deal, but final details are yet to be agreed on.

Two major discoveries have been made by energy companies off the Israeli Mediterranean coast over the past few years. The discoveries are “estimated to hold at least 650 billion cubic meters of gas. That is enough, in theory, to satisfy Israeli energy demands for decades, while leaving a surplus to export. Development of the resources will take years, and could ultimately prove less bountiful than forecast. Still, gas from one of the finds, the Tamar field, started flowing to Israeli plants earlier this year,” according to the Journal.

Jordan is said not to have many energy sources of its own, hence its reliance upon the imports of neighboring countries. Furthermore, Jordan is said to be in the pursuit of cheap energy supplies to compensate for its losses to Egyptian supplies, which have become erratic since the recent fall of the Mubarak regime.

Jordan and Israel currently maintain limited commercial ties and any gas supply deal could be difficult. The government of King Abdullah has been criticized by neighboring Arab nations for Jordan’s relationship with Israel.

The Journal explains that any agreement that could appear to make Jordan reliant on Israel would likely face domestic and Arab-world scrutiny. Although the two nations recently signed a substantive water sharing deal, energy is a more regionally sensitive topic.

“The commercial talks received a boost after Israel’s Supreme Court in October rejected a petition against the government’s decision earlier in the year to seek to export 40% of Israel’s offshore gas output. Because Jordan shares a border with Israel, it is in a position to start buying Israeli gas several years before larger potential customers in Europe,” the Journal explained.

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