(Updates to add more quotes, details) By Hassan Hafidh Of DOW JONES NEWSWIRES
AMMAN -(Dow Jones)- Jordan's cabinet Tuesday approved a government concession agreement with Estonia's Eesti Energia AS to explore oil and gas resources from the country's vast oil shale rock formation, government spokesman Nabil al-Shareef said.
"The Estonian company will hold a 76% [stake] in the project, while a [local] company called Far East Investment Co. will own the remaining," said Shareef, who is also a state minister for information and communication.
Final signing of the deal is expected next week in Amman, which the Estonian prime minister would be attending, Maher Hejazin, the head of the state-run Natural Resources Authority, told Dow Jones Newswires.
The companies are expected to invest around $6 billion over 10 years, Hejazin said in an earlier statement published by the local press. He said that the companies are expected to reach a production target of 36,000 barrels a day from an area called Attarat Um El-Ghurdan in southern Jordan.
Under the deal, the Estonian company is also set to build a 600 to 900 megawatt power station on a build-operate-own basis that will be fueled via the direct burning of oil shale, Hejazin said. The power plant is expected to cost around $1.5 billion, he added.
The Attarat Um El-Ghurdan as a whole is believed to contain the largest oil shale deposits in the kingdom with an estimated 25 billion tons. Eesti Energia's concession area is 38 square kilometers in size and is estimated to contain over 2 billion tons of oil shale.
Jordan, which imports about 95% of its energy needs, is estimated to have 40 billion tons in oil shale deposits, which are still unexploited.
The kingdom signed last year a concession agreement with Royal Dutch Shell PLC (RDSA) to explore oil in the country's oil shale deposits. Shell is expected to invest billions in the project over 20 years.
Jordan also signed a deal last year with BP PLC (BP) that could be worth up to $8 billion to explore and boost output from the kingdom's Risha gas field, near the border with Iraq.
Copyright 2009 Dow Jones Newswires
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