The Energy Sector
Jordan’s Economic Vision Roadmap
The Energy Sector
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Jordan’s Economic Vision Roadmap
The Jordan Strategy Forum (JSF) is a not-for-profit organization, which represents a group of
Jordanian private sector companies that are active in corporate and social responsibility (CSR) and
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Jordan Strategy Forum
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This is an expert opinion report based on discussions and focus group meetings held by
the Jordan Strategy Forum (JSF). The overall objective of this effort is to analyze different
sectors (14) of the Jordanian economy and their respective challenges, and come-up with
practical solutions and initiatives to enhance their competitiveness. Throughout this
exercise, the JSF facilitated the focus group meetings, and supported the work-stream
managers with any needed research and logistics.
Acknowledgment:
The JSF would like to extend its appreciation to the following work-stream members of the
Energy sector, who contributed to the focus group meetings, and in editing the proposed
initiatives and sectoral report:
Non- Conventional Energy Work Stream: Conventional Energy Work Stream:
Work Stream Manager: Work Stream Manager:
1. Dr. Maher Matalka 1. Ms. Rania Hindawi
Work Stream Members: (In Alphabetical
Moderator:
Order)
2. H.E. Dr. Khaled Shraideh
2. Dr. Ahmad Salaimeh
Work Stream Members: (In Alphabetical
3. Mr. Basil Marji
Order)
4. Mr. Hanna Zaghloul
5. Mr. Khalil Abu Al-Rubb 3. Eng. Abed Al Fatah Daradkeh
6. H.E. Ms. Kholoud Mahasneh 4. H.E. Mr. Abed Al Karim Alawin
7. Mr. Omar Abu Eid 5. Dr. Ahmad Hiasat
8. Ms. Rania Hindawi 6. Eng. Hassan Abdullah
9. Mr. Shukri Halabi 7. Dr. Issa Al Alem
8. Mr. Mohammad Khasawneh
9. Eng. Reem Hamdan
10. Mr. Sami Bustami
11. Mr. Tamim Suyyagh
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Table of Contents
Introduction .......................................................................................................... 5
Performance of the Sector in the Past 5 Years & COVID-19 Impact .................................... 6
Stakeholders’ Mapping for the Sector: Linkages & Overlaps ........................................... 10
SWOT Analysis ...................................................................................................... 12
Strategic Objectives:.............................................................................................. 13
Initiatives (projects) ............................................................................................... 14
General Recommendations ...................................................................................... 17
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1. Introduction
Without energy, nothing can come into being and nothing can exist. For every living being,
energy is very essential. Most importantly, energy is essential for the day-to-day activities
of humankind.
Economic growth is inextricably linked to energy. As energy is tied to the economy, the
need for reliable and affordable energy is fundamental as it supports expanding industries,
modern agriculture, increased trade and improved transportation. These blocks help
nations create better lives.
In light of the limited primary sources, Jordan highly depends on imported energy, mainly
oil and natural gas; about (91%) of the energy was imported in 2019, with a total
approximate cost of 2.429 Billion JD which equivalent to 8% of the GDP. Naturally, this bill
creates a burden on the economy, especially on its foreign currency in addition to
increasing the future risk of exposure to global and volatile energy prices.
The Government issued laws, policies, and programs to enhance the contribution of the
local energy sources, like renewable energy (solar energy and wind power), as well as the
local primary energy sources such as Oil Shale. It is also worth noting that the Strategy of
the Energy sector aims to increase the contribution of renewable energy to the total
energy mix to around 50% of the installed electricity capacity and oil shale to 15% by 2030.
Electricity prices are very high in Jordan when compared to the neighbouring countries.
Indeed, it is considered as an obstacle and one of the most serious challenges to the
competitiveness of investing sectors. The government has adopted several policies and
regulations to help reduce electricity prices such as net metering and wheeling regulations
that enable consumers to produce their own renewable energy projects to cover their own
consumption of electricity. However, these policies faced limitations related to the Grid
capacity.
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2. Performance of the Sector in the Past 5 Years & COVID-19
Impact
Electricity
Since the past decade, electricity demand in Jordan has considerably grown due to
economic growth and the increase in population, taking into consideration the influx of
refugees. Based on the National Electricity Company’s (NEPCO) annual reports, the
installed generation capacity has grown from 2000 MW in 2005 to more than 5000 MW
by the end of 2020 (Conventional: 4000MW and Renewable: 1424MW).
In 2011, the disruption of the gas line from Egypt led the Government of Jordan (GoJ) to
substitute natural gas with heavy fuel and diesel at substantially higher prices. Accordingly,
the National Electric Power Company (NEPCO) did not pass the excessive costs to
consumers through reflective tariff increases. Thus, accumulating a total debt of JD 5.5
billion between 2011-2014.
The Natural gas needed for electricity generation is imported; mainly Liquefied Natural Gas
(LNG) through the FSRU in Aqaba in the year 2018. In 2019, 10% of it was imported from
Egypt through the Arab Gas Pipeline. By the end of 2019, Jordan started receiving Noble
Natural Gas from the Mediterranean. According to the terms of the deal, Jordan should
receive about 220 Cubic Feet (CF) annually which represents about 60% of the estimated
350 CF total annual consumption. The deal covers 15 years and is based on a flexible price
formula linked to crude oil prices.
Moreover, the contribution of conventional energy (Natural Gas) in the electricity
generated constitutes 80% of the total electricity generated in Jordan in 2020. On the other
hand, renewable energy constitutes only 20%.
The project of generating electricity from oil shale with a capacity of is (470) MW was
expected to be completed in the second half of 2020. The project targets the local oil shale
solely with Chinese and Malaysian financing and utilizing technology from Estonia. It is
useful to note that the project is considered to be the largest in Jordan with an estimated
cost of USD 2.2 billion. In December 2020, the Minister of Energy and Mineral Resources
announced that NEPCO and the government have initiated arbitration proceedings against
the Attarat Power Company (APCO). The project commissioning was delayed due to the
onslaught of COVID-19 and several additional issues.
The electric interconnection positively impacts the stability of the electric system,
economies, energy exchange, and openness to the world. Within this context, it is useful to
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mention that Jordan has an electric interconnection line with Egypt and provides Palestine
with electricity. There have also been several attempts at the regional level with Iraq and
Saudi Arabia regarding the Gulf interconnection system, were memorandums of
understanding were signed. In 2021, the Ministers of energy of Jordan, Syria and Lebanon
agreed on an action plan and a timeline to restart the Jordan-Syria power line. In addition,
they also agreed on moving forward with all technical studies and the agreements needed
to put the project into gear. As for the discussions in 2021, they revolved around supplying
Lebanon with about 150 megawatts of electricity from Jordan through Syria between
midnight and dawn, and 250 megawatts during other times.
Oil and Gas exploration
Jordan has no developed oil fields, and announced six areas for exploration; the areas are
Sarhan, Dead Sea, northern highlands, Azraq, Jafer and west Safawi.
In terms of Gas, Jordan is increasing its efforts in the Risha field to double its production.
However, this will only be able to supply 5% of the consumed gas in Jordan even with
doubled production, as Jordan’s need is about 350 million Cubic Feet per day.
The priority for the government and NPC is to prove the Gas and Oil reserves and to have
a figure for the Proven Gas Reserves according to the Petroleum industry standards.
Regarding Oil Shale, there is only one company left working on Oil Shale Retorting Project.
This company is operating under a concession agreement for surface retorting.
Downstream Petroleum Sector
Jordan developed and implemented a plan for restructuring and liberalizing the
downstream petroleum sector in order to guarantee the security of oil supply of Jordan,
and to promote competition in the downstream petroleum market. The plan followed the
expiry of Jordan Petroleum Refinery’s (JPRC) concession agreement in 2008, which had
granted JPRC exclusive rights to refine crude oil, trade, and market petroleum products in
Jordan. The plan included the establishment of the Jordan Oil Terminals Company (JOTC)
as an independent open-access storage provider, in addition to licensing three Oil
Marketing companies (OMCs) for importing, trading, and marketing petroleum products
while the role of refining remains with Jordan Petroleum Refinery Company (JPRC).
JPRC is in the process of upgrading its capacity through the fourth Expansion project, the
objective of this project is to increase the capacity of the Refinery from 70,000 barrels per
day to 120,000 barrels per day, thus increasing the supply of local market demand to
around 90%. In addition to converting all the current and expected heavy fuel oil produced
to more valuable products (Gasoline, Jet fuel, and Diesel) with the goal to improve the
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margin of the Refinery, in addition to improving the quality of products to meet Euro5
emission requirements.
Founded in 2017, Jordan Oil Terminals Company (JOTC) the storage provider, wholly owned
by the Government of Jordan. Through its terminals and operations, JOTC serves the
Government of Jordan, along with several LPG companies and oil marketing companies
(OMCs), with high HSSEQ standards. It owns and operates the following Terminals:
Aqaba Oil and LPG Terminal (106 thousand MT)
Amman Strategic Terminal for Petroleum Products (360 thousand MT)
Aqaba Heavy Fuel Oil Terminal (195 thousand MT)
Three Oil Marketing Companies (OMCs); Total, Manaseer, and Jopetrol. Its responsibility is
to import the country has needs of oil products and supply it to Gas stations and
costumers.
The final step in the restructuring and liberalizing of the downstream petroleum sector is
to liberalize the prices of the oil products, which hasn’t been reached yet.
The LPG sector was liberalized since 2008 but still needs a regulatory framework that
regulates its activities in order to enable investments in this sector.
The three leaders of Jordan, Egypt and Iraq has created a secretariat in April 2020 to follow
up progress in the regional (Basra (Iraq) - Aqaba (Jordan) pipeline project and to set a road
map for implementation. This is a very ambitious project with an estimated cost of USD 5
Billion that aims at carrying crude oil from Basra to Aqaba and later to Egypt.
COVID-19 impact
COVID-19 is not only a global pandemic and public health crisis; it has also severely affected
the global economy and financial markets. Significant reductions in income, a rise in
unemployment, and disruptions in the transportation, service, and manufacturing
industries are among the consequences of the disease mitigation measures that have been
implemented in many countries.
Many measures such as quarantine, social distancing and lockdown have been set to
mitigate the coronavirus infection. The COVID-19 pandemic has caused profound
influences for many industries and the energy industry is naturally not immune in the
influences. According to statistic and projection data from the International Energy
Agency (IEA), the shock to energy demand in 2020 is set to be the largest in the last 70
years.
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For Jordan, the effect of the COVID-19 on the energy sector has not been studied
comprehensively but primarily, COVID-19 has caused great challenges to the energy
industry as it has impacts on energy demand and consumption. In general, the overall
energy demand declined in all sectors but increased in the domestic sector.
Oil products demand reduced significantly due to the halt of the commercial sector and
transportation, and the decrease of 75% of the demand of the industrial sector.
Electricity demand reduced significantly during the lockdown to around 68% of the normal
demand for the same period of the year 2019, electricity billing was suspended during the
lockdown, which affected negatively the cash flow of the distribution companies and
NEPCO.
The decline of electricity demand posed greater pressure on NEPCO due to its obligations
under the PPAs signed with the IPPs.
Delay of the commissioning of Attarat Power project and some renewable energy projects
and this delay was in the benefit of NEPCO as per NEPCO annual report.
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3. Stakeholders’ Mapping for the Sector: Linkages & Overlaps
Stakeholders of the sector are as follows:
The Ministry of Energy and Mineral Resources (MEMR): is responsible for ensuring a
secure and sustainable energy supply for Jordan and planning and policy making in relation
to wide range of energy issues including electricity. MEMR has been responsible for the
development of legislations in the energy sector.
The Energy and Mineral Recourses Commission (EMRC): the sector’s regulator, is
responsible for regulating and monitoring the energy sector, natural resources, minerals,
radio and nuclear work in the Kingdom; including petroleum, petroleum products, oil shale,
coal, natural gas, liquefied natural gas, biofuels, generation, transmission, distribution and
supply of electricity, renewable energy, radiation protection, safety and nuclear security.
Jordan Atomic Energy Commission (JAEC): is responsible for the transfer, develop and
promote the peaceful uses of nuclear energy and the Jordan nuclear program.
Electricity sector: Electricity sector in Jordan has three sub-sectors; the generation, the
transmission, and the distribution.
Generation: Power is produced by a state owned company (SAMRA) working alongside 4
independent generators IPPs and the RE generation projects.
Transmission: National Electric Power Company (NEPCO) a government owned company
is the sole electricity Transmission Company, the Sole Buyer of all electricity produced in
Jordan and Bulk supplier of electricity, System operator, Owner and Operator of the
Transmission Network, and the fuel Buyer as it is responsible for procuring the fuel for
Generators.
Distribution sector: is responsible for distributing electricity to final consumers
(Residential, Industrial, Water pumping and Agriculture, Services, Commercial, and Street
lighting) and consists of three privately owned companies which provide distribution
services in the country. The distribution companies purchase electricity from NEPCO and
sell it to end users at regulated tariffs. The distribution grids feed 99.9% of the population.
Petroleum upstream and downstream sector
Jordan Petroleum Refinery Company (JPRC): a public shareholding company
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Jordan Oil Terminals Company (JOTC): the storage provider a government owned private
shareholding company
Three Oil Marketing Companies (OMCs): Total, Manaseer, and Jopetrol. Their
responsibility is to import the country’s needs of oil products and supply it to Gas stations
and costumers.
Central LPJ Distribution Companies: companies responsible for distribution of bulk LPG to
customers.
National Petroleum Company (NPC): is a public shareholding company. The Jordanian
Government is the largest shareholder. The main objective of NPC is to explore for oil and
gas in addition to other related activities.
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4. SWOT Analysis
Strengths Weaknesses
1. Mature regulatory framework to build upon. 1. Regulations and regulatory oversight/policies
2. Existing IPP models in conventional energy and do not meet current and future requirements
RE in which to build upon for further private for energy transition and target attainment,
sector investment. and lack of M&E&V and progress on strategies
3. Reliable power and fuel infrastructure, and (updating existing regulations, and create new
abundant natural resources (wind, solar, and for new areas).
fossil fuels). 2. Dominance of flawed single buyer model/fiscal
4. Strong human resources and experience policy as a driver for energy policy, tariff
5. Geopolitical position. structure, and investmen.t
3. Lack of long term cost benefit analysis decision
making and awareness of green economy.
4. Power infrastructure constraints due to size of
the grid, min interconnectivity and impact on
resilience.
5. Minimal private sector involvement in planning
and organization.
Opportunities Threats
1. Availability of funding and incentives (and 1. No change in mindset and being left behind.
carbon markets) for climate mitigation 2. Continued lack of connectivity with
projects and solutions and implementation of surrounding markets and political uncertainty.
the green growth strategy and action plan. 3. Disruption in imported energy supplies.
2. Fast pace of technology development and 4. Lack of available funding for non-green
reduction of costs including projects.
(digitalization/DSM, RE, storage, e-mobility, and
hydrogen, WTE, EE).
3. Leadership role in energy transition and export
of talent, VC and HR/R&D to the region to
participate.
4. Linkages with mining and other industries for
Green molecules and green products. Positive
enforcement of Jordan as a green economy.
5. By going green, the competitiveness of
business is there - resource efficiency, and
reduced cost is a main outcome.
6. Support the attainment of other challenges
including transport, environment, industry,
water. Converting challenges into
opportunities.
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5. Strategic Objectives:
Strategic Objectives
1. Develop a blueprint for energy transition which includes regulatory and resource planning to reach
60% of primary energy mix by 2050.
2. Decrease pollutions and increase energy efficiency through implementation of the EE action plan,
electrification, smart grids, clean fuels and other mitigation measures.
3. Electricity/energy sector regulatory reform to enable market competition, promote private sector
investment and job creation, and adoption enabling technologies.
4. Enhance Technology / knowledge transfer, development and innovation in the sector.
5. Investment promotion and project development in promising fields of development (such as
hydrogen, Waste to Energy, EV networks, and other Green Economy projects).
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6. Initiatives (projects)
Initiative (1): Energy Water Nexus
Strategic Objective 1: Develop a blueprint for energy transition which includes regulatory and
resource planning to reach 60% of primary energy mix by 2050.
Short Description: Integrating energy / water / agriculture sectors to enhance energy use and
benefits across both sectors.
Expected Outcome:
1) Security of supply.
2) Grid balancing and energy storage/DSM.
3) Reduce costs and deficit (opex and capex) including cost of energy, water losses, maintenance
costs (for existing and future assets).
Initiative Owner: Ministry of Energy, Ministry of Water, Ministry of Agriculture
Initiative (2): Resiliency and Competitiveness of Gas and Electricity Supply.
Strategic Objective 1: Develop a blueprint for energy transition which includes regulatory and
resource planning to reach 60% of primary energy mix by 2050.
Short Description: Security of gas and electricity infrastructure, cross boundary trade, liberal markets
and new energy sources through the establishment of:
1) Interconnections – power and gas.
2) LNG import terminals.
3) Renewable and new fuels.
Expected Outcome:
1) Security of supply.
2) Increased penetration of RE
3) Export and geopolitical stability.
Initiative Owner: Ministry of Energy
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Initiative (3): Smart Grids for Smart People
Strategic Objective 2: Decrease pollutions and increase energy efficiency through implementation
of the EE action plan, electrification, smart grids, clean fuels and other mitigation measures.
Short Description: Increased energy efficiency through the drive towards electrification which is
enabled by digitalization, EV adoption, demand site management of industries and the water sector,
adoption of behind and in front of the meter storage, development of resilient grids, and a natural
gas grid.
Expected Outcome:
1. Reduction in energy costs and imports.
2. Improved competitiveness of industries.
3. Reduction in emissions and pollution.
Initiative Owner: Ministry of Energy, NEPCO, Distribution Company, EMRC
Initiative (4): Sector reform
Strategic Objective 3: Electricity/energy sector regulatory reform to enable market competition;
promote private sector investment and job creation, and adoption enabling technologies.
Short Description: Reform, strengthening of legislative framework and sector actors for improved
competitiveness and private sector participation in transmission, generation, distribution, fossil fuels,
RE, and new energies.
Expected Outcome:
1) Improved competitiveness and resiliency.
2) Increase use of domestic resources.
3) Promotion of investment and job creation.
Initiative Owner: Ministry of Energy, EMRC
Initiative (5): Creating bridges
Strategic Objective 4: Enhance Technology / knowledge transfer, development and innovation
Short Description: Invest in the education of energy sciences, with an emphasis on timely subjects,
and create bridges with international research organizations (both public and private) in order to
position Jordanian talent early in the energy transition process through adoption of early and relevant
curricula and pilot and research projects.
Expected Outcome:
1) Increased awareness on energy transition economy.
2) Job creation.
3) Sector competitiveness.
Initiative Owner: Ministry of Education, Ministry of Higher Education, Universities, Think Tanks and
Research Centers (Public & Private)
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Initiative (6): Packaging and unlocking opportunities.
Strategic Objective 5: Investment promotion and project development in promising fields of
development (such as hydrogen, Waste to Energy, EV networks, and other Green Economy projects)
Short Description: Identifying, packaging and enabling (through regulatory reform and incentives) of
proven and economical technology solutions to enable the energy transition process.
Expected Outcome:
1. Improved competitiveness.
2. Investment creation and job creation.
3. Reduced emissions and pollution.
Initiative Owner: Ministry of Energy, EMRC, All Stakeholders in the Energy Sector
Initiative (7): Jordan Petroleum Refinery Expansion Project
Strategic Objective 6: Investment promotion and project development in promising fields of
development (such as hydrogen, Waste to Energy, EV networks, and other Green Economy projects)
Short Description: The fourth expansion project of the Jordan Petroleum Refinery Company is one of
the largest investment projects at a level that supports the wheel of the national economy and
contributes to comprehensive development, which will positively reflect its outcomes on the Kingdom
and on the local community in particular. The refinery facilities are located in the Hashemite District
in Al-Zarqa governorate.
Expected Outcome:
1. Estimated employment in the project will range from (6500-5000) people.
2. Production of oil derivatives conforming to the latest European specifications.
3. Reducing emissions in and around the refinery.
4. Converting heavy crude oil (Bottom of the Barrel) into high-value products such as gasoline,
jet fuel and diesel.
5. Enhancing the energy security of the Kingdom in terms of providing more oil derivatives to
the local market or for export to neighboring markets.
Initiative Owner: JPRC
Initiative (8): Investing in Small Modular Reactors (SMR)
Strategic Objective 7: Investment promotion and project development in promising fields of
development (such as hydrogen, Waste to Energy, EV networks, and other Green Economy projects).
Short Description: Small modular reactors (SMRs) are advanced nuclear reactors that have a power
capacity of up to 300 MW (e) per unit, which is about one-third of the generating capacity of
traditional nuclear power reactors. SMRs, which can produce a large amount of low-carbon
electricity.
Expected Outcome:
This initiative seeks to attain more diversity in Jordan’s energy mix through generating electricity and
solving the problems of fresh water shortage by integrating nuclear energy and renewable energy
within a hybrid system.
Initiative Owner: Jordan Atomic Energy Commission (JAEC), NEPCO, Ministry of Water
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7. General Recommendations
During the discussions of the work stream members, one major question was asked: Is
there any opportunity for this effort to be read and implemented or is it going to stay in
the drawers?
Setting a strategy is not a challenge by itself but achieving successful strategy
implementation remains a continuing challenge, that’s why the recommendation is to have
a body that is responsible for assuring that the strategy (not only the energy strategy but
all sectors strategies) is well structured with a sound and clear strategic vision and well
implemented through adequate and competent leadership and human resources with
continuous monitoring and control. This will secure the strategy from alternate changes
because of governments’ changes and assures the stability of the implementation plan.
Restructuring and reform of the energy sector had started very early but it never
completed and all restructuring processes were stopped and tangled in the middle, that
lead to block the sector’s new investments, and as the world is moving towards
electrification, the reform of the electricity sector is a priority. This shall start by
restructuring of NEPCO, reviewing the single buyer model and the distribution licenses,
setting new principles and alternatives for the power purchase agreements. The
unbundling of the electricity activities will result in creating new activities for new
investments.
Diversification of the energy resources is important, but prioritize the diversification of the
energy mix to include domestic energy resources especially renewables is more important.
However, increasing the use of renewable energy comes with its own attendant challenges
on the electricity systems, such as intermittency and variability. Energy storage must
therefore become important in power system management and the energy strategy.
Oil Shale is rich of valuable minerals that is important for deferent industries, that’s why
it is important to develop a mechanism to market and promote oil Shale among
construction and Cement industries, as three out of four concessions for retorting was
terminated by the parliament.
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