World businesses are vigilantly looking for new territories to expand their business. When a prospect country is identified for business or investment project, the investors proceed to examine the grounds under which the business will thrive. Some of the major areas explored by the foreign investors or companies before launching a business are the current political, economic, and social stability of the country. The knowledge helps investors know whether the project will thrive or the investment will be lost. Also, the prospected challenges and necessary measures and strategies for solving the anticipated problems developed. This study aims at examining the political and economic circumstances prevailing in the Jordan market for a national oil company that intends to launch sour gas reservoir project in Jordan. The political and economic crisis the project is likely to encounter are defined, and recommendable measures to the crisis will be outlined.
Natural gas reservoir projects are beneficial to any state commercial breakthrough as long as the right actions and protocols are followed. Natural gas extractions are alternative sources of energy because gas can be extensively used for electricity generation. Jordan has for a long time had energy problems as there is no natural gas reservoirs, nor energy company project in the country. For many years, Jordan has relied on imported gas and oils from the OPEC countries especially in the Gulf region. The oil market, however, has not been consistent, and they keep changing from time to time. Due to political interests in the Gulf region, Jordan has faced multiple challenges during their oil acquisition process, a process that has seen the country take sides in their oil procurement process. Currently, Jordan imports oil from Israel at a low cost, but in exchange, Jordan has had to retain their loyalty to Israel (Novosel et al., 2014). Establishment of a natural gas reservoir in Jordan will bring the country, many benefits and independence.
The introduction of such a project in Jordan will be of great interest, but on the other hand, multiple challenges are presenting themselves economically and politically after the project is introduced. Some of the expected project benefits include increased employment, reduced cost of energy and oil prices, the revival of local business and industries. Also from the money made from the project by the government, they will be used to settle the piling country debt, and the country would not be subjected to undesirable conditions by other nations for oil gains.
Political and economic challenges that will affect development of natural gas reservoirs in Jordan
According to Hilson (2016), the Gulf region is famous for constant terror threats and attacks, and it is in the same location Jordan is located. Despite Jordan's independence supremacy in the Gulf, the country is left exposed to terror attacks from rival countries. The gas projects are volatile and can result in disastrous damages to a large population when terrorist attack the gas reservoirs. The gas reservoirs are easy to destroy by launching of simple explosives by terrorists such as missiles and grenades. Therefore, terror attacks are a common threat to the Jordan gas projects. Natural gasses are transported through the pipeline, but due to the increased terrorist attacks the gas pipelines are subjected to destruction, and disastrous damages are incurred when the gas leak to the environment.
Jordan political stability is wanting. The country has exhibited instances of political and the power struggle that have resulted in demonstration and national strikes. Political instability is a threat to any investors because the project assets are likely to be destroyed in the process of demonstration. Also, the project is likely to be politicized during the time of political differences resulting in projecting closure or seizing. Such instances are likely to cost the project investors a fortune. Political instability is also likely to cause constant oil price fluctuations and export problems.
The natural gas project is demanding and financially draining since a lot of investments have to be made before returns are made. The gas project has a lot of financial requirement, which includes drilling, installation of modern technology in the production process, development of gas pipeline among other things. For the company to begin the project, in most instances the government of Jordan needs to be involved in shareholding process and financing. However, due to the financial crisis in Jordan, the government is likely to fail in meeting its intended investments as agreed upon on time. The process might slow down the project activities and it may take long for investors to make a favorable return (Mane, 2005).
In case natural gas exportation is a challenge as multiple factors need to be considered. Natural gas is exported to countries through pipeline or tankers a process that is expensive and problematic. The project establishment process demands diplomatic agreement, which are not easy to acquire especially in the Gulf, where indifferences between the countries in the region are evident (Mane, 2005). The process of exportations is diplomatically impossible and risky at the same time.
Natural gas production in Jordan is likely to be subjected to domestic politics. The natural gas productions raise concerns of environmental impacts among the Jordanian public and the company is also likely to export most of the gas and reserve a little for domestic use triggering energy security issues in the country. The excess exportation of the gas will highly favor the state investors who are country tycoons. Therefore, the project is easily subjected to politicization in the process (Hilson, 2016).
Some of the economic and political crisis are inevitable and therefore it is best for the project to design alternative measure and strategic positioning to ensure that the production and marketing process of the gas is swift and consistent. Some of the actions include, the government needs to place the project money ready before the commencement of the project rather than producing the money in installments. The gas projects are highly volatile, and the terrorists are likely to target such country damaging properties. Therefore, the corporation and the government need to deploy tight security measures at all time to protect the reservoirs. For the project to escape domestic politicization, the project needs to meet all environmental protocols and standards. Also, the project should reserve enough gas energy for domestic use before meeting exportation demands. Build of exportation pipeline is complicated for the corporation and therefore the project should seek alternative means to transport the gas and also strike an appealing diplomatic relationship with neighboring countries for them to be allowed to pass the pipelines through the countries. Jordan needs to retain high political stability, which will keep the country at peace and enable the country to run its projected affairs smoothly. Political stability will boost the economy as most investors will be interested in investing in the country.
Mane, D.O., 2005. Emergence of the Gulf of Guinea in the global economy: Prospects and challenges (No. 5-235). International Monetary Fund
Hilson, G., 2016. Natural resource extraction and indigenous livelihoods: Development challenges in an era of globalization. Routledge.
Novosel, T., Cosic, B., Puksec, T., Goran, K., Mustafa, M., Mathiesen, B.V., Lund, H. and Duic, N., 2014. 100% renewable energy systems using wind, PV and desalination: A case study for the country of Jordan. In Digital Proceedings of the 9th Conference on Sustainable Development of Energy, Water and Environment Systems-SDEWES. University of Zagreb, Faculty of Mechanical Engineering and Naval Architecture..
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