The move to award a $1.1 billion green ammonia project in Jordan to a Polish-Emirati consortium will support the country's clean energy ambitions and boost economic growth, a senior executive has said.
Amman this week signed a 45-year investment agreement with the consortium, Jordan Green Ammonia, to produce 100,000 tonnes of green ammonia a year near the kingdom's only port in Aqaba. Production is expected to start in November 2030 and most of the ammonia is to be sold to Europe.
The project, one of Jordan's biggest, comes as the country deals with the economic effects of the Iran war. Jordan's economy has been stagnant for more than a decade, with unemployment at more than 20 per cent.
Jordanian industrialist Wael Suleiman, chief executive of Jordan Green Ammonia, said the country's "sun power" was a key resource that could boost its economy as western nations push consumers to buy green products.
“In this world, you have Chile, Namibia and then Jordan with the most sunny days in a year," he told The National in an interview in Amman. Jordan has an estimated 320 days of sunshine a year.
The consortium was formed three years ago to explore government incentives to produce ammonia near Aqaba using solar energy. With support from the US and the EU, Jordan is hoping to attract investment in its Red Sea city, with an emphasis on environmental protection.
Jordan relies heavily on American assistance, which includes an annual $842 million cash injection into its budget. The EU injects a smaller amount but is still a major donor.
Foreign investment in Jordan has been sparse since the 2008 global financial crisis. The country's average income, at $4,600 a year, is low compared with the Gulf and other regional countries such as Lebanon and Iraq.
“Jordan has been stable, despite what is going on around it," Mr Suleiman said. He expects more investor interest in the country if geopolitical risks subside, especially since Jordan has a "fantastic, well-educated" labour force.
Low-risk project
The consortium comprises Abu Dhabi headquartered Fidelity Group, which was set up by Mr Suleiman in 2010, and Poland’s Hynfra. The project in Aqaba carries minimum risk “from a technical point of view", Mr Suleiman added.
The consortium has so far spent $14 million on basic designs, feasibility studies and other reviews, with involvement from Britain's Penspen engineering company, Norwegian systems specialist Det Norske Veritas and Danish engineering and technology company Toosoe. Consultancy Dar Al Handasah, which has offices in Amman, Abu Dhabi and Dubai, is to carry out the detailed design before construction next year.
The plan is to build a desalination plant with annual capacity of 2.5 million cubic metres and a 550 megawatt solar plant. Electricity from the plant will be sent 52km to an industrial compound, which will produce nitrogen from the air and hydrogen from water. The two components make up ammonia.
Land for the project will be leased from the state, which will receive about 12 per cent of the profit in tax and royalties once production begins. The ammonia, which is mainly used in fertilisers, will be exported from Aqaba to European markets, with the consortium building its own loading arm at the port.
Financing will comprise 30 per cent equity and 70 per cent outside investment. Mr Suleiman is confident of securing the 70 per cent, mainly from European investors. Minimising loans would keep production costs at $400 a tonne, he said.
The desalination plant will be much smaller than a centre with capacity for 300 million cubic metres a year, to be built in Aqaba under a 30-year concession awarded in January 2025 to the Suez conglomerate and French investment company Meridiam. The National Conveyer project is aimed at supplying Amman with water. It will cost an estimated $4 billion and relies on US and EU funding and guarantees.
Rising EU demand
EU legislation mandates that, by 2030, about 40 per cent of the ammonia used on the continent has to come from renewable energy, as opposed to natural gas and coal sources. Hydropower and wind can be also used to produce ammonia without generating emissions.
The Aqaba project will save 200,000 tonnes of carbon emissions a year, Mr Suleiman said.
Hynfra has green ammonia projects in Mauritania, Egypt and Oman. Similar projects have been announced in Saudi Arabia and Kuwait.
But Mr Suleiman expects demand in markets such as Europe to absorb the capacity in the Middle East in the next several years.
Unlike the US, there is little possibility of the EU easing its emphasis on sustainability, partly because a consensus has developed on the continent about climate change, he said.
