TFIZ01 - KUWAITI OIL FOR JORDAN

S E C R E T KUWAIT 001153

SIPDIS

STATE FOR NEA/FO, NEA/ARP AND NEA/ARN
STATE ALSO FOR EB/ESC

E.O. 12958: DECL: 1.6 X5, X6
TAGS: EPET EAID PREL KU SA JO
SUBJECT: TFIZ01 - KUWAITI OIL FOR JORDAN


Classified By: Ambassador Richard H. Jones for reasons 1.5 (B) and (D)


1. (S) Ambassador spoke with Kuwaiti Minister of State for
Foreign Affairs Shaykh Mohammad Sabah Al-Salem Al-Sabah
afternoon of Thursday, March 27 on the status of Kuwait's
agreement to provide Jordan with 25,000 barrels of oil per
day (BPD) in light of the loss of Iraqi oil supplies.
Ambassador noted USG understanding that the Jordanians were
loading Saudi oil from the Ras Tanura terminal in the Persian
Gulf, and suggested the same tanker might load Kuwaiti oil
from the Neutral Zone terminal at Khafji. (The GOK had
previously proposed a swap of Khafji oil for Saudi crude to
be loaded at the Saudi Red Sea terminal at Yanbu.)


2. (S) Dr. Mohammed said that he had spoken to Jordanian
Foreign Minister Marwan Muasher earlier, and they had indeed
already reached such an agreement. Oil experts were now
working out the details of a loading schedule.


3. (S) The MinState expressed his surprise that the
Jordanians were lifting at Ras Tanura, given the short
distance from Yanbu to Aqaba, and Ambassador opined that
perhaps a full loading schedule at Yanbu may have precluded
quick Jordanian access to the facility. Dr. Mohammed also
questioned the Saudi refusal to accommodate the proposed
swap, with Ambassador briefly outlining Saudi concerns about
the legal complexities of swaps and desires for simplicity
and discretion.


4. (U) On March 29, local English-language daily "Arab Times"
carried an AFP report which quoted 'industry sources' as
saying that Jordan had secured 50,000 bpd from Saudi Arabia
and 25,000 bpd from Kuwait to replace suspended Iraqi
supplies. The sources said that Jordan was paying 'full
market prices' for the crude.


5. (S) COMMENT: Necessity is the mother of invention.
Hopefully, this will be the last U.S. midwifery of the deal,
but we are not counting on that. END COMMENT.
JONES