DUBAI: Four Arab countries have embarked on a massive multi-billion dollar economic project that may also foster the kind of intra-Arab unity that politicians have long promised.

The project promises to build a land-and-sea pipeline between Egypt, Jordan, Syria, and Lebanon to deliver natural gas for use in power plants in those countries. Cyprus and Turkey are also to join in later phases.

In the first phase, which has been completed, Egypt built a 270-kilometre pipeline from its Red Sea to Jordan's seaport of Aqaba. In the second phase, the 38-km pipeline will link Jordan to Syria.

The third phase of the project, to start next year and end in 2007, and will link Syrian and Lebanon. The Jordan-Syria pipeline will cost 35 million dollars, while adding Cyprus and Turkey to the network will cost an additional 550 million dollars.

The decision to convert the power plants - most of them currently using diesel fuel - to use gas is mostly for economic reasons. "Gas is cleaner and supposedly much cheaper, and there is a lot of it in the Middle East. This project should have been done long time ago," says Khaled Bushnaq, director of Energy Management Services, a consulting firm, in Dubai.

The project will require substantial upfront cost, most of it on Egypt's shoulders. "This is primarily a shared-cost project. Every country will pay for the construction in its country but the longest part was in Egypt and Egypt has the most to benefit from this project," says Digby Lindston, an editor with Middle East Economic Digest (MEED), which specializes in Middle East economic issues.

Of all the countries involved in the project, Egypt has the largest quantity of gas and the most developed pipeline network for gas distribution. As part of the agreements signed between the countries, they will - at least for now - purchase the gas needed for their power plants from Egypt.

Lebanese officials have said their country will save 300 million dollars a year by converting its seven power plants to use natural gas. Jordan, for its part, does not have any oil reserves and has traditionally received its oil from the former regime of Saddam Hussein in Iraq.

With Saddam gone, and no below-market oil expected from Baghdad, converting power plants to gas will save the cash-strapped government of King Abdullah much-needed hard currency.

Syria has some oil and can produce limited quantity of gas but it, too, can save by selling oil on the world market at higher prices and buy cheaper gas. But the project could be a risky one. While gas is cheaper than oil, its price is ultimately tied to the price of oil, which currently stands at about 30 dollars a barrel.

Many experts, including those in oil- producing Arab countries like Saudi Arabia, have said that price is not sustainable and will fall.

"By and large gas is cheaper but there have been a number of gas exploration projects in this region and not all have been economically as beneficial as first thought," Bushnaq says.

The project may produce more than economic benefits. Egypt, home to the 22-nation Arab League, has long considered itself the most influential Arab state and could reap political benefits from this project. Not only will the project depend on Egyptian gas, it will also boost Cairo's diplomatic leverage in the region.

But Egypt's wishes could face a few bumps on the road. The ability of the participating countries will depend on their economic growth in the coming years and their ability to shoulder the cost of building various portions of the pipeline.

Once Turkey joins the pipeline, the participating countries could have access to gas from one of the Middle East's largest oil producers, Iran. That is because Turkey has built gas pipelines with Iran - and Russia-and would be able to supply gas to Jordan, Syria and Lebanon from those countries. -Dawn/The InterPress News Service.