Secret Israel-Jordan gas deal revealed

Tamara Nassar 2 October 2019
The full text of the Israel-Jordan gas deal has been revealed for the first time since it was signed in September 2016.

The Jordanian government has classified the document, but it was leaked to media over the summer by Jordanian lawmaker Saleh al-Armouti.
Al-Armouti had earlier disclosed some of its contents during a press conference.
The document provided by al-Armouti appears to be a translation into Arabic of an English-language original which has not been published.
The contents confirm suspicions that the Jordanian government misled the public about its involvement in the deal, as well as the conditions for its cancellation and its implications for the Jordanian economy.

Government to government

Amid intense criticism, Jordanian officials have tried to distance the government from the deal, obfuscating the extent of state involvement on both sides.
Mohammad Momani, then government spokesperson, asserted shortly after the deal was signed that it was between two corporations, American and Jordanian, and not between two governments.
Former Prime Minister Abdullah Ensour made a similar claim, asserting that the seller is a private company.
He claimed that the House of Representatives, therefore, has no role in ratifying the deal.
The Jordanian Campaign to Stop the Zionist Gas Deal published a list of government officials it said were responsible for the agreement and for misleading the public about it.
The gas deal was signed between NBL Jordan Marketing Limited and Jordan’s government-owned national electricity company NEPCO.
NBL Jordan Marketing is a subsidiary of the US firm Noble Energy.
It is registered in the Cayman Islands, a notorious offshore tax haven, and headquartered in Herzliya, near Tel Aviv.
NBL is itself a partnership owned by Noble Energy Mediterranean Limited – another subsidiary of Noble Energy – and three Israeli companies: Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration.
Delek Drilling and Avner Oil Exploration have since merged.
These partners together operate the so-called Leviathan gas field in the Eastern Mediterranean under a concession from the Israeli government.
The companies extracting the gas pay royalties and taxes to the Israeli government, which Delek Drilling estimates will run into tens or hundreds of billions of dollars.
This means that the Israeli government is a direct beneficiary of the transaction and, as critics charge, Jordanian taxpayers and electricity customers will directly subsidize Israel’s treasury, as well as its military and occupation of Palestinian land.
Jordan will be paying at least $10 billion over 15 years for a total of 45 billion cubic meters of natural gas. The price of the gas is subject to change depending on the market value. Jordan will also bear additional costs to build a pipeline and other infrastructure.
The company Jordanian Egyptian Fajr for Natural Gas Transmission and Supply will be responsible for the transfer of the gas.
The agreement confirms, moreover, that one party to the deal is effectively the Jordanian government.
NEPCO can only withdraw from the deal if another governmental organization, or another wholly owned government company, takes over, the deal stipulates.
The Ministry of Energy and Mineral Resources in Jordan is formally listed in the deal as a middleman between the buyer and the seller.
In addition, the deal is conditioned on the Jordanian and Israeli governments signing agreements covering several issues related to the flow of gas between the two countries.
Cancellation terms differ when it comes to the Jordanian and Israeli sides.
If the American-Israeli side wishes to cancel the deal due to shortcomings by the Jordanian side during the first five years, NEPCO must pay NBL Jordan Marketing $1.5 billion.
The penalties gradually decrease after five years.
However, if NEPCO decides to quit the deal due to NBL Jordan Marketing’s shortcomings, the American-Israeli side is obliged to pay less in compensation – $1.2 billion during the first five years.
Hala Zawati, the Jordanian energy minister, told Jordan’s Roya TV last year that Jordanian citizens would be the ones to bear the enormous cost of cancelling the deal.
The agreement requires both sides to maintain strict secrecy about all its terms until five years after the deal expires.
Neither party can even make public statements in relation to the deal without giving the other a week’s notice.
Constitutional dispute
Jordanian lawmakers say that the signature of the deal without the approval of parliament is unconstitutional.
They referred the matter to the constitutional court in March.
The court ruled last month that the deal does not require parliamentary approval.
The court stated that this is because the agreement is between two companies as opposed to two governments.
The court asserted that NEPCO should not be considered an official public institution even though it is fully owned by the state and its leadership is directly appointed by the Jordanian cabinet.
Lawmakers had pointed out that the Jordanian constitution states that “Treaties and agreements which entail any expenditures to the Treasury of the State or affect the public or private rights of Jordanians shall not be valid unless approved by the parliament.”
It also stipulates that “in no case shall the secret terms in a treaty or agreement be contrary to the overt terms.”
The terms of the deal, as well as statements by ministers, make it obvious that the agreement does ultimately put the Jordanian state – and therefore taxpayers – on the hook.
But the Jordanian public and their representatives have been given no say and little transparency.
Negative implications
Government officials have often claimed the deal would benefit Jordan’s economy.
In 2014, Mohammad Hamed, then Jordan’s minister of energy, asserted that buying natural gas from Noble Energy does not make the Jordanian economy hostage to any state, a reference to Israel.
But the importation of Israeli-supplied gas may affect Jordan’s right to produce its own natural gas.
The deal stipulates that even if natural gas is discovered in Jordan, the amount of gas Jordan must import from Israel cannot be significantly reduced.
Jordan can enter negotiations with the Leviathan partners to reduce the amount of Israeli-supplied gas it must buy only after it purchases 50 percent of the total contracted amount.
Even then, the reduction cannot surpass 20 percent of the daily contracted amount.
Noble Energy is insured by the US government’s Overseas Private Investment Corporation, which affirms that the deal will advance US employment through “substantial US procurement.”
This indicates that American corporations, as well as Israel, are likely to be the biggest beneficiaries.
Jordan has alternative energy sources. The importation of Israeli-supplied gas, which was pushed by the Obama administration, is widely seen as more of a diplomatic deal benefitting Israel rather than one based on Jordanian necessity.
Critics have pointed out that the billions of dollars that will be sent to Israel, helping it reinforce its oppression of Palestinians, could instead have been invested in developing Jordan’s vast potential for renewable wind and solar power.
Tamara Nassar is associate editor of The Electronic Intifada.