OIL AND JOBS FOR JORDAN: AMERICAN FIRM HAS BIG

UNCLAS SECTION 01 OF 02 AMMAN 003931

SIPDIS

SENSITIVE

USDOC FOR 4520/ITA/MAC/ONE/PTHANOS
STATE PASS TO TDA FOR STEINGLASS/SIGLER
STATE PASS TO OPIC

E.O. 12958: N/A
TAGS: EINV ETRD ENRG JO
SUBJECT: OIL AND JOBS FOR JORDAN: AMERICAN FIRM HAS BIG
PLANS

SENSITIVE BUT UNCLASSIFIED


1. (SBU) SUMMARY: Washington Group International (WGI)
executives updated post on lurching, but continuing, progress
on the commissioning of a magnesium oxide plant for the Arab
Potash Company (APC) and shared ideas on proposed energy
synergies that could result in significant cost savings and
job growth in Jordan's Dead Sea area. They also told the
Ambassador that WGI would seek TDA support for a feasibility
study of a newly developed oil shale extraction process that
would enable the company to produce over 100,000 barrels of
crude oil per day in Jordan at economical production costs.
END SUMMARY

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MAG OXIDE PLANT: NOT OUT OF THE WOODS YET
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2. (SBU) WGI Executive Vice President Gil Clausen and Vice
President James Shultz paid a courtesy call on Ambassador
Gnehm and Econoffs June 25. The purpose of their visit was
to update the Ambassador on current projects, WGI's
relationship with the Arab Potash Company (APC),and
prospects for new sources of energy and fuel in Jordan. WGI,
a global engineering, construction, environmental and mining
company is nearing completion of a magnesium oxide producing
plant in Jordan for APC.


3. (SBU) WGI took over the contract from a pair of German
and Turkish companies to build the magnesium oxide plant and
bring it into operation. Clausen said that although the
German and Turkish companies left a mess behind them, the
plant was presently in its final commissioning stages.
However, difficult market conditions, which include prices
that are below "economic feasibility", and an extremely
competitive environment, meant that the project was not "out
of the woods" yet. Clausen said despite the questionable
economics of the project, WGI was still looking forward to
its completion and hopeful of its success.

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AND JOBS AS WELL
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4. (SBU) More broadly, Clausen said that Dead Sea mining had
vast unexploited commercial and economic potential. He said
WGI looked at the sector in its entirety, in contrast with
the GOJ's "one project at a time" view of the region and its
potential. He said that the area's main need was for energy.
Construction of a power plant fired by natural gas piped in
from Egypt via Aqaba could provide power for APC, Jordan
Bromine, the magnesium oxide plant, a possible future
magnesium metal plant, and, potentially, for Israeli industry
on the other side of the Dead Sea. Clausen said an
"independent power complex on the Dead Sea" could fulfill the
entire 220 megawatt need of the mining concerns on the
Jordanian shore of the Sea and still have some surplus gas
available for sale. He said he had discussed the idea with
Planning Minister Bassem Awadallah, who was also in favor of
the project. Clausen said the project would provide 10,000
jobs in the currently impoverished region.

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OIL IN JORDAN?
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5. (SBU) Meanwhile, Clausen told us that a newly-developed
extraction process could enable WGI to extract from 100,000
to 200,000 barrels of crude oil per day from oil shale
deposits found south of Amman. Previously recovery costs for
these deposits had been too high to be economical, but the
process, developed by Sun Corporation of Canada, could
produce from 50,000 to 70,000 barrels per day initially, with
"centuries of reserves" at production costs of $8-10 per
barrel. He added that the economics on the project "have
been reviewed" and that WGI has the right team in place to
make it happen. He said that WGI executives have been
consulting with GOJ officials, including Awadallah and
Minister of Energy Bataineh, who are eager to get the project
on the fast track. The next step, Clausen said, was a
full-blown feasibility study, about which it would soon be
approaching the US Trade and Development Agency (TDA).

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COMMENT
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6. (SBU) WGI's comprehensive approach to Dead Sea mining
merits consideration by the TDA, the GOJ, and interested
foreign investors. If the company's projections on the oil
shale and the natural gas plant are realized, the economic
impact on Jordan and the Dead Sea mining sector may be
significant. Post will continue to monitor the progress of
all of WGI's projects, current and proposed, and will lend
support when appropriate. END COMMENT




GNEHM