JORDAN SEEKS TO SECURE SUPPLY OF IRAQI OIL

C O N F I D E N T I A L AMMAN 004247

SIPDIS

E.O. 12958: DECL: 07/10/2013
TAGS: ENRG PREL IZ JO
SUBJECT: JORDAN SEEKS TO SECURE SUPPLY OF IRAQI OIL

Classified By: Ambassador Edward W. Gnehm for reasons 1.5 (B)&(D).


1. (C) During a 9 July meeting, Jordanian FM Marwan Muasher
raised with Ambassador the status of a proposed trip to
Baghdad by a Jordanian interministerial team. The purpose of
the visit would be to follow-up at a technical level on a
conversation Industry & Trade Minister Salah al-Bashir had
with CPA Advisor Reuben Jeffery during the Dead Sea World
Economic Forum meeting, and to discuss arrangements for the
commercial supply of Iraqi crude oil to Jordan. The Foreign
Ministry will be providing a proposed delegation list to post
shortly. Trade Minister al-Bashir, following up on his
commitment to Jeffery, has also provided a "non-paper"
listing the other issues the delegation wishes to discuss.
Post will provide this to CPA and NEA.


2. (C) Ambassador informed Muasher that the embassy had not
yet received a reply from CPA to the request for meetings in
Baghdad, but was continuing to work the issue. Muasher
stressed that the delegation wished to travel to Iraq as soon
as possible and lock in an oil supply deal before Jordan
faced an oil shortage, possibly by the end of July. Muasher
explained that Saudi Arabia continued to supply Jordan with
the 50,000 bbl/day it had pledged, but nevertheless the GOJ
was compelled to draw down its stocks by roughly 40,000
barrels a day to meet domestic consumption requirements.


3. (C) While Kuwait had provided oil, the Kuwaiti oil was
incompatible with Jordan's refinery and had to be sold to
finance the purchase of compatible crude. This had upset
some Kuwaiti officials, who stopped crude deliveries to
Jordan. Muasher called the Kuwaiti Minister of State for
Foreign Affairs, Sheikh Mohammad, who promised to resolve the
problem. Muasher added that the United Arab Emirates had
delivered only two of its promised payments, further
exacerbating the situation.


4. (C) Ambassador mentioned that U.S. supplemental assistance
was intended to solve just such problems and permit Jordan to
purchase the crude it needed on the open market. Muasher
agreed, but said that Iraq represented the least expensive
source of oil for Jordan, even at market prices (which the
GOJ is ready and willing to pay),and that it was only
logical for the GOJ to actively pursue the cheapest available
option. Hence, the Jordanians wanted to reach an agreement
quickly with the CPA to re-establish Iraq as a supplier of
crude to Jordan.


5. (C) Ambassador cautioned Muasher to be pragmatic in
considering the early resumption of Iraqi crude deliveries.
The lack of security in Iraq and the ongoing problems in
raising production levels were real uncertainties and
concerns. As Jeffery had told the Jordanians at the WEF
Summit, crude production first would be used to meet domestic
Iraqi needs -- then come exports. Muasher said he
understood, but reiterated that the GOJ hoped to confirm its
requested meetings with the CPA as soon as possible and to
negotiate a supply agreement before Iraqi oil production was
committed elsewhere.
GNEHM