Jordan Gets Crude Oil from Iraq

UNCLAS BAGHDAD 003312 SIPDIS SENSITIVE SIPDIS STATE FOR EEB AND NEA/I E.O. 12958: N/A TAGS: EPET ENRG ECON EINV IZ SUBJECT: Jordan Gets Crude Oil from Iraq REFS: A) Amman 3626 B) Amman 3557 C) Amman 1479 SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET ¶1. (U) The Iraq Ministry of Oil confirms that it has resumed exporting crude oil to Jordan at a discounted price. Shipments are being arranged via truck from Kirkuk. ¶2. (SBU) Iraq had reached agreement with Jordan in August 2006 to export an initial 8,000 barrels/day of crude oil. Deputy Minister of Oil al Shamma confirmed with us that the agreement calls for Iraq to eventually provide 100,000 barrels of oil per day. The effective date of the contract begins on first delivery, which approximates the first date seen on the chart below of September 12, ¶2007. With a contract duration of one year, the contract would end on September 11, 2008, and with a two year extension the contract would end approximately September 11, 2010. The plan is to increase delivered quantities to 10000 barrels per day for the first year, 30000 barrels per day for the second year, and 100000 barrels per day for the third year. ¶3. (SBU) So far, the quantities of crude shipped and delivered have been very small. The Ministry reported that the following shipments from Kirkuk have been made: Date Truckloads Barrels 9/12 25 6123 9/16 2 471 9/17 18 4044 9/18 27 6013 9/19 13 2840 9/20 13 2925 9/22 35 7723 9/23 18 3954 9/24 15 3411 10/4 20 4500 ¶4. (SBU) No shipments were sent on September 13-15; 21; and 25-30. More trucks are scheduled to be loaded and delivered to eventually meet the agreement targets. Normally, the trucks that are used hold approximately 36,000 liters of crude each, but sizes can vary. Note that the chart above only represents the trucks that have left Kirkuk, not the number of truck or barrels of oil that have crossed into Jordan. Through September 30, 166 trucks (37,504 barrels) have arrived at the Iraq and Jordan border, but only 38 trucks have entered Jordan and unloaded. Crude oil transfers (unloading) have been performed by gravity feed from an Iraqi truck to a Jordanian truck. No pumps are used - none are available. This allows only transfers of 7 to 10 trucks per day. Once emptied, the trucks return to Kirkuk for refilling. Trips for trucks reportedly are very dangerous in both directions. Perhaps 4000 to 8000 barrels can be shipped daily if the equipment is working and trucks are available and operational. ¶5. (U) Under the agreement, Jordanians will get the oil at a fluctuating price, subtracting a fixed discount from the international market price. ¶6. (U) According to AmEmbassy Amman reporting (reftels),30,000 barrels per day would meet approximately 30 percent of Jordan's daily needs. Before the 2003 war, Iraq had been providing Jordan with all its crude oil needs at preferential prices. ¶7. (SBU) COMMENT: There are a number of reasons why these shipments make sense for Iraq now, even if it is a losing proposition money-wise. The shipments help create jobs, even if only for Iraqi truckers. Iraq also is diversifying its exports (albeit on a tiny scale in relation to the 1.6 million barrels per day it has been sending through its southern oil port). Press reports within Iraq characterize the shipments as aiding Iraqi expatriates living in Jordan. That aid is not direct, but the oil deliveries are a political gesture to Jordan, and may act as a political counterpoint to Iraq's plans for oil exports to Syria and Iran. CROCKER#