Jordan signs $2B oil shale investment agreement with Saudi company
15 March 2014
The government of Jordan and the Saudi Arabian Corporation for Oil Shale (SACOS) recently signed a $2-billion agreement under which the government grants the Saudi company the right to extract and to develop the oil shale resources in the Attarat Um-AL-Ghudran region covering an area of 11 square kilometers.
The Saudi company will use the Russian Oil Shale Technology (UTT3000) which has proved its success internationally in developing oil shale since 1950 in Estonia, which is currently producing around 10 thousand barrels a day of shale oil.
The project will be developed through two main phases, the first of which is called the Pre-Development phase, which expand over four years. The company will conduct detailed technical, engineering, environmental and feasibility studies according to the concession agreement requirement during the Pre-Development phase. The company shall also submit bank guarantees of up to $30 million to guarantee the accomplishment of the work program as approved by the government.
The second phase is the 40-year development and production phase, starting with a production capacity around 2,650 barrels per day reaching up to 30 thousand barrels per day within (8) years, in addition to producing electrical power of 600 MWe to be transmitted into the national electrical grid. The cost of the project including the shale oil upgrading facilities is estimated to be $4 billion.
During the production phase the company pays a petroleum tax which reaches up to 65% plus a royalty on production which reaches up to 5% of the production. The company is committed to an annual payment of $100,000 to the Natural Resources Authority for capacity building; in addition to an annual payment of $75,000 for sustainable development projects for local communities. The company is committed also to pay $250,000 as a bonus to the government of Jordan after four years, in addition to $10 million after commercial production.
The agreement was signed by the Minister of Energy and Mineral Resources / President of the Natural Resources Authority Mohammad Hamid and Maher Hijazin, President of SACOS and Member of the Board of Directors of the Company.
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