$10 billion Russia-Jordan nuclear deal promises dividends

$10 billion Russia-Jordan nuclear deal promises dividends

Last week, Jordan signed a $10 billion dollar deal with Russia to build the country’s first nuclear power plant. For an energy-strapped nation as Jordan, the project is an important investment for diversifying its energy sector and reducing Amman’s dependence on costly energy imports.

On March 24th, Jordan and Russian officials signed a $10 billion dollar agreement to allow the Russian owned energy company Rosatom to build Jordan’s first nuclear power plant. The facility – to be constructed in the northern region of the country – will have two 1,000 megawatt reactors and supply 30% of Jordan’s total energy by 2023.

Although the deal is mired in controversy – with opponents citing the spectre of Fukushima and fearing a regional nuclear arms build up – it marks a vital step forward in Jordan’s efforts to seek alternative energy supplies.

Need to diversify energy resources

Jordan is one of the Middle East’s most energy-poor nations. It has no domestic energy resources and currently imports 96% of its electricity which accounts for one-fifth of its GDP. A growing population and industrial expansion, coupled with the pressures of domestic demand (currently growing at more than seven percent per year) only further exasperate Jordan’s energy woes.

Previously, a large portion of Jordan’s oil and gas imports came from Iraq and Egypt. However, recent violence in Iraq and militant attacks against gas pipelines in Egypt has led both countries to cut off supplies. Consequently, Jordan has been “left bleeding,” losing approximately $3 billion every year as a result, according to Khalid Toukan, head of the Jordanian Atomic Energy Commission (JAEC).

In an attempt to diversify its supplies, the Jordanian government has undertaken several development initiatives to foster alternative energy production. Small scale shale oil production, led by several international firms, is set to begin by 2018, while twelve solar energy plants are planned to begin operations in mid-2017.

Alongside these sources, government officials hope that nuclear energy will play an even larger role, increasing Jordan’s domestic energy supplies in the future. The country has a rich and bountiful supply of natural uranium deposits with 2.1% of proven global reserves. As such, in 2007 Jordan’s Committee for Nuclear Strategy set out a program for nuclear power to account for 30% of electricity by 2030. So far it has conducted several studies and preliminary building projects for nuclear energy and desalination plants.

Amman’s nuclear ambitions long in preparation

Jordan’s recent decision to adopt nuclear energy has not come out of the blue, but is the result of years of preparation.

In 2008 the JAEC and Atomic Energy of Canada Ltd (AECL) with SNC-Lavalin signed an agreement to conduct a three year feasibility study on potential nuclear energy implementation in Jordan. Later that year, the Commission signed a “memorandum of understanding” with Korea Electric Power Corp (KEPCO) to carry out site selection and more feasibility studies on nuclear energy in the nation’s southern regions. In November 2009, JAEC signed an $11.3 million agreement with WorleyParsons for the pre-construction phase of a nuclear power plant.

While the focus of the agreements has been on assessing the feasibility of creating a nuclear energy industry, the nuclear deal signed last week between Russia and Jordan sets the stage for the actual construction of Jordan’s first nuclear power plant.

The deal envisages the construction of a dual reactor, 2000 megawatt, power plant at Amra in the north of the country by 2022. As part of the deal, Jordan is required to purchase fuel from Rosatom for the reactors for 10 years, after which it can approach other suppliers. Rosatom will cover 49 percent of the project’s costs and Jordan the remaining 51 percent. The deal comes after Russia signed an agreement with Egypt on February 10th to build Egypt’s first nuclear power plant.

Future impact

The Jordanian and Egyptian nuclear deals have instigated significant debate over the viability of such plans, as nuclear energy opponents and environmental officials voice concerns over the regional impact of the plants. Some argue that the proliferation of nuclear energy in Jordan and in Egypt could lead to a Middle East arms build-up or “nuclear race” to counter the possible nuclear threat from Israel or Iran.

Additionally, in a post-Fukushima world, local populations are voicing fears about the possibility of another nuclear disaster. Furthermore, environmental officials argue that the water needed for plant production and operation could threaten local supplies. Jordan already lacks adequate water resources. Energy experts also question the cost effectiveness of building a nuclear plant. They argue that solar and wind power are less risky, lower cost alternative energy sources.

Conversely, proponents of the deal argue that despite said criticisms, the deal with Rosatom marks an important step forward in Jordanian efforts to diversify its energy sources. For a nation desperate for alternative energy supplies to support a growing population and economy, the development of nuclear energy offers promising prospects for long term economic stability and growth.

About Author

Madeleine Moreau

Madeleine Moreau is the GRI Senior Commissioning Editor and a Senior Analyst currently based in Beirut, Lebanon. She specializes in investment risk and opportunity in the Middle East and has previously lived in Jordan and Morocco. Her work and insight have appeared in several leading publications, including Business Insider, TechCrunch, Oilprice.com, The Atlantic Council, Yahoo News and OZY. She holds a Bachelor’s degree in Political Science and Arabic from Middlebury College.