LNG shipments from Qatar will help develop transport infrastructure

The arrival of the first liquefied natural gas (LNG) shipment from Qatar at Aqaba Port in May 2015 signalled a major step forward for Jordan’s energy sector, while also putting the country’s plans for developing transport infrastructure firmly in the spotlight. The heightened activity at Aqaba has underscored the need to boost connectivity between the country’s only port and the north, and reduce the strain on its roads.

Driving The Distance

Aqaba Port was responsible for around 55% of Jordan’s entire export trade in 2013, while handling some 73% of total imports during the year, according to the Department of Statistics. The area is also home to the Aqaba Special Economic Zone, an industrial site including airport and maritime facilities, factories, workshops and businesses. However, given the instability in neighbouring Syria and Iraq, pressure is likely to increase at Aqaba, with overland trade largely paralysed by border attacks from insurgents. In April 2015, Jordan closed its only working border crossing with Syria at Jaber. This has forced Jordanian traders with commitments in Syria or Iraq to rely on sea routes via Haifa in Israel or through the Suez Canal to Aqaba.

While the port itself is facing greater traffic, the two overstretched highways which link the port to the north of the country – where most of Jordan’s population is located – are also under strain. Rail has emerged as the front-runner in discussions aimed at exploring alternative forms of transport. Jeppe Jensen, CEO of Aqaba Container Terminal, told OBG, “An important dynamic to take into consideration for substantial logistic chain efficiency gains would be the development of a hub-and-spoke system in Jordan, using railway on long distances and dry ports from which cargo could be further distributed in Jordan and the wider Levant region.”

Jordan already possesses two rail networks, both of which are managed by government-owned entities. The Hejaz Railway Corporation (HRC) operates 217-km of track, while the second 293-km line is under management by Aqaba Railway Corporation (ARC). HRC’s main route runs from the Syrian border to the Modawara crossing on the Saudi border. The ARC, meanwhile, transports cargoes of phosphates from mines in the southern interior to Aqaba.

Making Connections

The government is looking to develop the network further, with the aim of connecting the port with the capital. The first phase of the network would connect Aqaba and Amman, including a connection to Ma’an.

The Aqaba-Ma’an-Amman project is the cornerstone of a JD2bn ($2.8bn) plan for the network announced by former transport minister Lina Shbeeb in April 2015. The roll out for the three-part scheme is set to begin with the construction of the Aqaba-Ma’an stretch and the Ma’an dry port, followed by the Ma’an-Amman phase of the project. Phase three will link the capital to Mafraq, where another dry port is to be built. The railway project has widespread backing among transport and logistics firms. Aside from improving connectivity, the service is expected to reduce transport costs, making Jordanian exports more competitive and imports cheaper. The dry ports will also go some way towards cutting clearance times, while also bringing new investment and jobs to Ma’an and Mafraq.

Despite optimism, the network plan faces some uncertainty. Established road hauliers may see rail as unwelcome competition. In addition, the authorities’ success in securing private investment for such a large infrastructure project could be determined in part by what is offered in terms and conditions, with much hanging on the shape of the contracts offered by the ministry. Yet the need for railway is widely acknowledged, and the government’s commitment to pushing it through is an encouraging sign for both investors and future transport users.