King Abdallah and President Mubarak launch pan-Arab pipeline

By Dalya Dajani, Jordan Times, Monday 28 July 2003

TABA/AQABA—King Abdullah of Jordan and Egyptian President Hosni Mubarak on Sunday inaugurated a strategic pan-Arab gas pipeline that will land Egypt on the list of global gas exporters and save the Kingdom $500 million over the next 10 years. The two leaders attended a brief ceremony at the Egyptian coastal resort of Taba, marking the launch of the Arab Gas Pipeline Project, before cruising to Aqaba by sea, where they witnessed the flow of Egyptian gas into the Aqaba Thermal Power Station.

The 270–kilometre pipeline is the first phase of an inter-regional economic venture, estimated at more than $ 1billion, that will later stretch to Syria, Lebanon in 2005 and beyond to Cyprus and Turkey by 2006.

A 16-kilometre marine link between Taba and Aqaba, completed in just 18 months, marked the first phase of the project through which 1 billion cubic metres of Egyptian natural gas will be supplied each year.

Minister of Energy and Mineral Resources Mohammad Batayneh yesterday said Egypt's gas supply is expected to save the Kingdom JD 34 million, or $50 million each year, whilst also providing a low-cost and less harmful source of energy.

Today we celebrate the completion of the first phase of this megaproject which I believe could not have been possible without the unwavering support of our Arab and Egyptian counterparts and the political will of our countries' two leaders, said Batayneh.

The 270-kilometre gas pipeline linking Taba to Aqaba was constructed despite the difficult terrain of the Sinai mountains and the depths of the Gulf of Aqaba in a record time of 18 months, he added.

The underwater pipeline, was built by the Dutch Allseas firm, one of the major offshore pipelay and subsea construction companies in the world at a cost of $70 million. Batayneh added he expected the project would be developed to include big-and medium-sized industries in the north and central parts of the Kingdom, and additionally used for cars and buses.

The Arab Economic and Social Development Fund invested $50 million for the first stage of the pipeline, while the Kuwait Fund for Economic Development financed $100 million.

Senior officials including Minister of the Royal Court Faisal Fayez, Foreign Minister Marwan Muasher and Aqaba Special Economic Zone Commissioner Akel Biltaji accompanied King Abdullah and the visiting Egyptian delegation yesterday.

Egyptian Petroleum Minister Sameh Fahmy briefed the two leaders on various facets of the Arab Gas Pipeline project, noting that the current pan-Arab economic cooperation is a valuable step towards building a common Arab market in the field of energy.

Egypt's proven reserves of gas are estimated at around 60 trillion cubic feet with potential reserves estimated between 80 to 1,000 trillion cubic feet.

The second phase of the project will entail construction of a 390-kilometre gas pipeline from Aqaba northwards to the Rihab power station some 24 kilometres from the Syrian border at a cost of $250 million.

From there, it would reach Khirbet Al Samra and Al Hussein thermal stations in Zarqa. A joint Jordanian-Egyptian company, Al Fajr, is to be set up to execute the second phase with Jordan's share at 20 per cent, Egypt's at 40 per cent and the United Arab Emirates at 40 per cent.

Under the third stage, the gas pipeline will be extended to the Syrian port of Banyas on the Mediterranean, and in 2005 to the Zahrani Refinery in Lebanon. From there in 2006, a marine line will convey gas to Cyprus from Lebanon.

An agreement was signed between Egypt, Jordan, Syria and Labanon in January to carry out the third phase for the completion of the project which entails the establishment of a company, to be based in Syria, for the promotion and sale of Egyptian gas. A council will also be formed in Lebanon to overlook the completion of the gas pipeline to Tripoli.

The export of Egyptian gas marks the first step taken by the country to join the global market in this field.

Based on the 2.7 per cent average world population growth, global demand for natural gas is expected to increase between 23 per cent to 28 per cent between the years 2000 and 2025 .

Fahmy told the two leaders and attending officials that Egypt was working towards exporting 7.5 billion cubic metres of natural gas to Spain and Italy by the end of 2004 each year.