AMMAN, Jordan, June 27 (UPI) -- Jordan is pushing ahead with plans to build the Middle East's first shale oil-fired power plant, a major step toward achieving energy security by the resource-poor Hashemite kingdom.
Its fragile economy had long been shackled by dependence on imported energy, a problem sharply accentuated by high oil prices during the past three years and the turmoil in the Arab world since early 2011.
The kingdom, whose economy has largely survived on hefty handouts from the United States and the petro-monarchies of the Persian Gulf, sits on top of an estimated 100 billion barrels of shale oil -- the fourth-largest shale oil reserves in the world after the United States, China and Russia.
Moves to develop the deposits began in 2006, but the high price of extraction was a major drawback.
The steep rise in oil prices in 2008 and the political convulsions of the Arab Spring in 2011 hit Jordan hard.
The loss of low-cost Egyptian natural gas via a pipeline across the Sinai Peninsula, totaling about 80 percent of Jordan's electricity generating fuel needs, meant Amman had to rely on expensive oil imports for power generation.
That cost the equivalent of about 25 percent of the kingdom's gross domestic product.
"Energy is the Achilles heel of the Jordanian economy, it's a huge vulnerability for Jordan," Nemat Shafik, deputy head of the International Monetary Fund observed during a recent visit to Amman.
The energy issue has assumed even greater political importance in recent months as unrest within Jordan has grown.
About 400,000 refugees from the civil war in neighboring Syria have flooded into the country, overwhelming its already stretched resources, and engendering domestic discontent and demands for democratic reform that are increasingly posing a challenge to the Hashemite monarchy.
There are increasing signs Jordan may be dragged into the Syrian conflict on the side of rebels seeking to topple the Damascus regime of President Bashar Assad.
The United States has sent a Patriot missile battery and a squadron of F-16 combat jets to Jordan, and U.S. forces are training Syrian rebels in the kingdom.
Abdullah II, whose great-grandfather founded the Hashemite kingdom set up by the British after World War I, has a lot riding on the shale oil operation, in which Royal Dutch Shell and British Petroleum are helping out.
The Middle East Economic Digest reports the Amman government has set a target of meeting 14 percent of the kingdom's energy needs from shale deposits by 2020.
The proposed shale-fired power plant is scheduled to be operational by 2017, with a planned capacity of 500 megawatts, cutting the cost of Jordan's electricity generation by nearly $500 million a year.
The power scheme will be operated by Estonia's Enefit and Jordan's Ministry of Energy and Mineral Resources. More power plants are likely.
Amman has increasingly focused on the shale oil exploration. Along with the go-ahead on the power plant, several exploration contracts were signed in 2012.
"The success of the exploration program is not guaranteed," said Gulf-based analyst Andrew Roscoe. "The cost of extracting shale oil means that it is only feasible when oil prices are high. However, the vulnerability of Jordan's economy to external events has made the decision to tap its natural resources an easy one to take.
"With the kingdom's overall fiscal deficit reaching 8.8 percent of gross domestic product in 212, Amman must ensure proposed schemes to reduce its energy bills come to fruition," said Roscoe.
The Energy Ministry signed an agreement with Canadian Global Oil Shale Holdings in September 2012 to assess oil shale resources across 86 square miles of the Attarat Um Ghudran and Isphere al-Mahatain regions of southern Jordan.
Another possible source of energy may be opening up through neighboring Israel, with which Abdullah's late father King Hussein, signed a peace treaty in 1996.
The first of Israel's offshore gas fields in the eastern Mediterranean began production in March and Prime Minister Binyamin Netanyahu's cabinet approved exporting 40 percent of all gas produced.
The Israelis have a strategic interest in maintaining the Hashemite monarchy, even though the peace treaty is not popular with most Jordanians, so supplying Jordan via a relatively short pipeline would seem to be in the cards.
