Did you know that 100 years ago Jordan, which was under the Ottoman rule, did not only have a functional railway but it also ran it with fuel from its own oil shale?
And did you know that a Jordanian oil expert recommended that Jordan move to oil production from its massive oil shale reserves?
So what became of the oil? Is it still to come! What is the reason for the delay?
I believe the answer rests with another huge level of reserves: mediocrity.
Yes, Jordan, a country that has been so dependent on oil imports for over six decades now, was able to produce its own oil to run its railway system about a century ago. And Jordan today, with proven oil reserves that surpass 50 billion barrels of oil (twice the level of reserves of Qatar) from its oil shale, making it the 4th largest in the world, is starved for energy sources.
One should not be surprised. In 1999, while working for the government, I was called upon, with two other economists and two engineers, to conduct an evaluation of a proposal that was presented to Jordan by a foreign company to produce oil from oil shale. The company had already tested 15 tonnes of rock from Jordan that was flown to the firm’s headquarters for that purpose. The cost of the proposal neared $5 million. The company had offered to invest $4.95 billion in Jordan at zero cost to the government. Our team, composed of five technocrats, was to evaluate the validity of the proposal.
Our assessment showed that Jordan would do well even if the oil price dropped to $14 per barrel — the price then was $20 per barrel. Jordan was to produce 70,000 barrels by 2007 and become a net exporter of oil by 2010 — if I recall correctly. The assessment was presented to the Cabinet, approvals came and then nothing happened.
The reason was that the government was getting from the Iraqi regime half of its oil supply for free and the other half at a discount. Did no one think then that this subsidy would end if the regime, a bloody dictatorship, is toppled? Obviously not, so the country did not see any reason to invest in developing its own oil resources and showed little interest in addressing the investor’s proposal.
The investor lost interest as well, and Jordan may produce shale oil in 2014, 15 years later.
Interestingly, Jordan produced its energy strategy in June 2004, over a year after the start of the invasion of Iraq. JordanTimes 19/2/2013