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Cablegate: Jordan Gets Crude Oil From Iraq

VZCZCXRO7980
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3312 2781309
ZNR UUUUU ZZH
R 051309Z OCT 07
FM AMEMBASSY BAGHDAD
TO RUEHAM/AMEMBASSY AMMAN 1278
RUEHC/SECSTATE WASHDC 3705
INFO RUCNRAQ/IRAQ COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

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#

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