VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #2421/01 2321347
ZNR UUUUU ZZH
R 191347Z AUG 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3349
INFO RUEHGB/AMEMBASSY BAGHDAD 6057
RUEHLB/AMEMBASSY BEIRUT 2904
RUEHBR/AMEMBASSY BRASILIA 0027
RUEHEG/AMEMBASSY CAIRO 3766
RUEHDM/AMEMBASSY DAMASCUS 3961
RUEHKU/AMEMBASSY KUWAIT 0915
RUEHLO/AMEMBASSY LONDON 1227
RUEHRH/AMEMBASSY RIYADH 2004
RUEHTL/AMEMBASSY TALLINN 0021
RUEHTC/AMEMBASSY THE HAGUE 0353
RUEHFR/AMEMBASSY PARIS 1532
RUEHTV/AMEMBASSY TEL AVIV 1300
RUEHJM/AMCONSUL JERUSALEM 5135
RUEAIIA/CIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEKJCS/SECDEF WASHDC

UNCLAS AMMAN 002421 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EEB, ISN/NESS, AND NEA/ELA 
STATE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON JO
SUBJECT: Jordan Puts Oil Shale Projects on Hold to Pursue Uranium 
Mining 
 
REFS: A) Amman 233 
 
SENSITIVE BUT UNCLASSIFIED.  CONTAINS BUSINESS PROPRIETARY 
INFORMATION.  NOT FOR DISTRIBUTION OUTSIDE THE USG. 
 
¶1.  (SBU) Summary:  Jordan released a new national energy strategy 
in December 2007 that identified various areas for increasing 
indigenous energy resources and reducing dependency on foreign oil 
(ref A).  Given recent hikes in world crude prices, the Government 
of Jordan (GOJ) has faced pressure to implement the new strategy as 
quickly as possible and competing priorities have emerged.  Most 
recently, the Cabinet decreed on August 6 to suspend ongoing 
feasibility studies, tenders, and other activities in oil shale 
exploration within central Jordan for a period of up to 18 months in 
order to first explore uranium mining activities in that region. 
While the Jordan Atomic Energy Commission argues that this makes 
sense since the uranium is closer to the surface than oil shale, the 
Natural Resources Authority believes that this decision sends 
negative signals to foreign investors who have already signed 
memoranda of understanding with the GOJ and invested significant 
funds and time in oil shale projects.  End Summary. 
 
40 Billion Tons of Oil Shale Reserves 
in Jordan Spell Great Potential 
------------------------------------- 
 
¶2.  (U) Jordan, which imports over 96% of its energy and is 
struggling to meet growing needs, has the world's fourth largest 
reserves of oil shale - a rock that contains kerogen and can be 
retorted at high temperatures to form crude shale oil, gases, and 
char.  According to the Natural Resources Authority (NRA), some 40 
billion tons of oil shale exist in over 20 sites, mainly in central 
Jordan.  Note:  An estimated 1.25 tons of extracted oil shale are 
needed to produce a single barrel of crude oil.  End note.  While 
the resource can be found as shallow as 40 meters (131 ft.) below 
the surface in the west and south, oil shale is at deeper levels, 
some 900 meters (2,953 ft.), in the east and north of the Kingdom. 
 
 
¶3.  (U) Jordan's energy strategy aims to have oil shale comprise 11% 
of Jordan's energy mix by 2015 and 14% by 2020.  Jordan Engineers 
Association President Wael Saqqa told local press that exploiting 
oil shale reserves would satisfy Jordan's oil needs for the coming 
700 years.  NRA Director General Maher Hijazin also averred to 
Econoffs that oil shale is the medium- and long-term answer to 
Jordan's energy needs. 
 
Surface Oil Shale Exploration in Central Jordan 
--------------------------------------------- -- 
 
¶4.  (SBU) Under four separate memoranda of understanding with the 
NRA, Estonian Eesti Energia, the Brazilian firm Petrobras, the 
Jordanian-British-owned Jordan Energy and Mining Limited (JEML), and 
a Saudi firm have been conducting for several years surface oil 
shale feasibility studies in four separate blocks in the Attarat Um 
Ghudran and Wadi Maghar areas of central Jordan.  The NRA had hoped 
to sign concession agreements with the four companies by the end of 
the year and have commercially viable oil shale within the next 10 
years.  Having already finished its feasibility study, Eesti Energia 
concluded that there was the potential to produce 36,000 barrels of 
oil per day by 2018 in its assigned block, and already signed an 
agreement with the Jordanian National Energy Power Company (NEPCO) 
and the Ministry of Energy and Mineral Resources (MEMR) to do 
testing and drilling over the next two to three years.  NEPCO 
Director General Ahmed Hiyasat said that at that point, the GOJ 
would present Eesti an offer to develop an Independent Power 
Producer (IPP) in the range of 600 megawatts and if the price was 
right, a contract would be signed.  The NRA had also floated a 
tender with a bid deadline of August 14 for surface oil shale 
exploration in four additional blocks in central Jordan; Hijazin 
 
noted that the U.S. company EcoShale had already submitted a bid. 
 
Deep-Oil Shale Exploration by Shell 
----------------------------------- 
 
¶5. (SBU) The NRA has also been hoping to conclude by September 2008 
negotiations on a long-term concession agreement, which would run 
between 15 and 20 years, with the Anglo-Dutch group Royal Dutch 
Shell on deep oil shale exploration.  Under the potential 
concession, Shell would survey and develop 22,000 square kilometers 
(8,494 square miles) of land, nearly one quarter of the country, in 
the central and northern regions of Jordan.  Ian Bromilow, the 
Jordan Country Chairman of the Shell Business Development Company 
Middle East, told Econoffs that Shell expects to apply its patented 
In-situ Conversion Process, which the company developed in Colorado. 
 The process entails drilling shafts through the rock surface and 
inserting heaters which cook the oil shale rock at around 300 - 350 
degrees Celsius over several years to produce oil that is pumped to 
the surface for extraction.  Bromilow said Shell knows the location 
and the depth of the oil shale, but does not yet know the quality. 
 
 
Uranium Exploration Trumps Oil Shale 
------------------------------------ 
 
¶6.  (SBU) Despite these agreements, the Cabinet decided on August 6 
to freeze oil shale activities in the Attarat Um Gudhran and Wadi 
Maghar areas for 18 months since they fall within a 1,500 square 
kilometers (579 square miles) area of potential uranium reserves for 
Jordan's nuclear energy program, which is to provide 6% of Jordan's 
energy mix by 2020.  Note: Jordan has an estimated 130,000 tons of 
uranium reserves.  End note.  Jordan Atomic Energy Commission (JAEC) 
Chairman Dr. Khaled Toukan indicated to Econoffs on August 13 that 
the decision made sense because uranium is at shallower levels of 
0.5-10 meters (1.6-33 ft.) below the surface than oil shale and 
could be lost if not exploited first.  He expected that a joint 
venture for uranium exploration between a strategic partner and 
Jordan Energy Resources, Inc., which JAEC owns, would be established 
by the end of the summer, and noted that there have been several 
interested parties, including the French company Areva and the 
multinational Rio Tinto Group. 
 
¶7.  (SBU) Toukan noted that the JAEC had identified three different 
zones within the central region - 1) Zone A which has known uranium 
deposits; 2) Zone B, which is close to potential uranium reserves; 
and 3) Zone C, which is on the periphery.  He said that many of the 
current oil shale projects are located in Zone C, and therefore, the 
JAEC will ensure that any uranium exploration first occurs in that 
zone within the next six months.  If nothing is found, then the 
areas will be released and made available for further oil shale 
activities, although small lots might still be designated as buffer 
zones between work sites.  If deposits are found, however, Toukan 
said it would most likely take 18-24 months for complete extraction 
before the areas will be relinquished. 
 
Impact on Investment? 
--------------------- 
 
¶8.  (SBU) Toukan thought oil shale companies would welcome the 
Cabinet's decision as a means for ensuring that they are not working 
on top of one another, not to mention that some of the more shallow 
excavation work would actually be done for them.  Additionally, he 
did not believe that the GOJ was reneging on any agreements, since 
they were primarily for studies, and no contract had been awarded 
yet for the new tender.  Hijazin disagreed, however, arguing that 
numerous studies have already identified where the uranium reserves 
are located in central Jordan, and they do not necessarily overlap 
with the blocks that were designated for oil shale exploration.  He 
fears that the decision will discourage future investment and bring 
lawsuits against the government.  He also lamented that many 
 
international firms invested time and money into bidding on the new 
tender, which would now need to be stopped. 
¶9.  (SBU) In particular, Hijazin said the Estonian company, which 
has already invested about $15-$20 million, has threatened to pull 
out of Jordan.  He added that Eesti Energia representatives met with 
the JAEC and requested a letter of comfort from the GOJ that it 
would be able to resume work as agreed after the six month initial 
exploration period, but nothing has been provided to date.  Both 
Hijazin and Hiyasat presented the solution of carving out the 
Estonians' 10 square kilometers from the larger area designated by 
JAEC, since neither believes it holds uranium based on geological 
studies, but Hiyasat noted that MEMR would need to take such a 
decision.  Hijazin said that although the area designated for 
uranium mining also conflicts with a small portion of the block 
being given to Shell, that company was less concerned since its 
project also involves other areas within Jordan and is more 
long-term, with a final investment decision not expected until 2018. 
 
Comment 
------- 
 
¶10.  (SBU) The concept of oil shale extraction is not new in Jordan. 
 For over 30 years, government officials and international 
organizations have revisited the prospect of oil shale production in 
Jordan, but the cost of production was always much higher than the 
market price of purchasing crude oil until recently.  Now that world 
crude oil prices have skyrocketed, oil shale has once again risen to 
the forefront as a potentially viable alternative, but there are 
still many challenges, including high sulfur and ash content in the 
shale, environmental concerns, and water requirements.  Further 
studies and environmental impact assessments need to be done before 
oil shale can be declared the savior of Jordan's energy needs. 
Likewise, the nuclear energy program is a long-term prospect that 
still requires development of human capacity and studies on suitable 
reactor sites, water requirements, and environmental impact. 
Despite the long-term nature of both program areas, they hit a 
crossroads early on, requiring that strategic implementation 
priorities be addressed.  The decision making process, however, has 
caused concern about transparency and the credibility of GOJ 
commitments in the energy sector.  The GOJ will need to ensure that 
present and future investors do not become discouraged or else 
Jordan may be left with great energy plans and no one to implement 
them. 
 
Visit Amman's Classified Website at: 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
Beecroft