Algerian Hydrocarbon Exports to Jordan to Begin in September

Following a series of challenges facing its energy sector, Algeria has announced its intention to begin oil and gas exports to Jordan beginning in September, providing a bit of relief to the beleaguered industry.

According to a Bloomberg report, Algeria signed a memorandum of understanding with Jordan to initiate oil, liquefied natural gas and liquefied petroleum gas exports eastward as soon as September.

For Jordan, the agreement would open the door to much needed energy imports following some uncertainty related to its existing trade partners. Over the last several years, Jordan, which has little to no energy resources of its own, has struggled to replace the loss of imports from traditional producers in the region like Egypt.

Amman has initiated new efforts with Israel and has now begun to explore longer term agreements with Egypt following the recent discovery of an offshore "super giant" gas field.

For Algeria, the agreement provides some signs of progress for an energy sector that has struggled to boost production in recent years due to a host of domestic and international market challenges.

The country's state run energy firm Sonatrach, has worked to repair its public image following a corruption investigation that resulted in a change in leadership. Despite these changes, the country's energy sector has struggled to regain confidence with needed foreign partners to revive waning production.

That confidence was further shaken when violence from surrounding states spilled over into Algeria with the targeting of exploration efforts a few years back, leaving scores dead.

Further, like other members of OPEC, Algeria has strained under the pressure of sustained low oil prices, which have eaten away at revenues and much needed public funds.

While a full recovery of crude prices to the level seen two years ago is not expected in the near future, new trade partnerships could ease the pressure of persistently low prices.

According to the report, Algerian Energy Minister Salah Khebri said that Sonatrach and Jordan's National Electric Power Company "should reach a final agreement in the next few weeks".

Exploration efforts in Jordan on behalf of Sontrach could ultimately be part of the deal.

Source: Forbes