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#