New Policy for Oil Exploration in Jordan
by Dr. Cyril Widdershoven

OIL EXPLORATION OPPORTUNITIES IN JORDAN: A NEW POLICY AND TRENDS

Introduction:

With a population of 4.5 millions occupying an area of about 90,000 square kilometers, bounded by oil-rich Middle Eastern provinces, Jordan is a modern state of free market economy with prosperous transportation, telecommunication and services sectors and mild climate all year around.

As a member of WTO, Jordan has embarked on a policy of encouraging foreign investments into the country. To accommodate such undertaking, many new legislative regulations have already been passed by the Parliament.

Exploration Database:

For the last 20 years, the Natural Resources Authority has maintained a sizable and neatly-preserved data on about (100) wells and (30,000) kms of seismic lines (including limited 3-D seismic on Risha and Dead Sea areas). Other magnetic, gravity, geological, geophysical and geochemical data are also available.

Although a confidentiality agreement has to be signed, NRA continues its policy of releasing these data to interested companies free of charge.

Current Status of Exploration:

Jordan is relatively under-explored in terms of number of wells drilled relative to the total area of sedimentary basins.

Between 1986 and 2000 many international companies have worked in Jordan under

Production Sharing Contracts and Assistance Programs. The List include Amoco, Hunt, Petrofina, Petro-Canada, JNOC, Anadarko and Benton.

For only practical reasons, Jordan is currently divided into (9) exploration blocks as shown in the attached map, where block boundaries can be adjusted as the case might requires.

Hydrocarbon Production and Occurrences:

Oil was discovered in 1984 in Hamzeh Field of Azraq Area with cumulative production to-date of about 1 million barrels( 40 b/d ).

Commercial gas was discovered in 1987 in Risha area close to the border with Iraq with cumulative production to-date of about 100 BCF (30mmscfd).

Other oil occurrences in Jordan include light oil of 42 API in well WS-4 of Sirhan area, oil shows in Cambrian sandstones of wells AH-1, AH-2 and HD-1 in Dead Sea area. Oil shows were also recorded from Jurassic carbonates of well NH-2 near border with Syria.

Base Silurian hot shales constitute a major source rock for Paleozoic petroleum systems while the deep-seated upper Cretaceous oil shales are believed to constitute a major petroleum system that is yet to be tested

Basic PSA Conditions and Fiscal Terms (New Terms)

The government of Jordan has approved the new policy to encourage investment in the oil and gas sector of the country. The main highlights of this new policy include:

A.     Production Sharing:

II-Cost Recovery rates that can reach up to 70 %

III -Letter of Credit (Performance Guarantee) The government adopts a performance guarantee of USD 0.5 million.

IV-Signature Bonus / Royalty, No royalty and signature bonus are required.

Other basic terms in the contract include:

1.      All articles and annexes are negotiable, have the same force and effect and when completed they take the power of law and published in the official Gazette.

2. The exploration period of about (8) years is divided into three phases whereas the development period is (25) years. The commitments for each exploration period usually include the drilling of 1 or 2 wells and/ or seismic surveys. The contract terminates if no commercial discovery is made by the end of third exploration term.
3. In addition to the right of assignment at any time, contractor can relinquish the license at any time if relevant guarantees are met.
4. Contractor has the exclusive right to conduct petroleum operations in the described area to any delivery points in Jordan. The rights include construction of roads, pipelines, telecommunication systems, landing fields and other facilities. NRA shall support and provide every assistant to contractor in obtaining all necessary approvals, licenses, and permissions from relevant Jordanian authorities.
5. Contractor shall bear all expenses of petroleum operations and shall look only for cost recovery share, which he is entitled to under the relevant terms of contract.

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Reprinted as submitted.