Page 4 - DMEA Week 26

DMEA Commentary DMEA
Jordan awaits crude
shipments, but
making good progress
As Amman waits for new crude ows from Iraq to begin, the Hashemite Kingdom nds itself in a strong position considering its lack of domestic resources.
mIddle eaSt
WHat:
Trucked cargoes of 10,000 bpd are due to start arriving at Zarqa re nery this week.
WHy:
Jordan and Iraq signed a raft of deals earlier this year, with hydrocarbon supplies key to the former, which imports nearly all of its oil and gas.
WHat next:
Momentum appears
to be building behind
the construction of a 1,700-km oil pipeline linking the two countries, but implementing
and securing the line will require major commitment.
JORDAN’S Zarqa re nery is awaiting delivery this week of the rst 10,000-barrel batch of crude to be delivered under a tender that was awarded in May.
Local firm Burj Al Hayat Transport and Trading won a tender from Jordan’s Ministry of Energy and Mineral Resoures (MEMR) to truck a total of 500,000 tonnes (3.67 million barrels) of crude from Baiji in central Iraq, with cargoes of 10,000barrelsperday(bpd)arrivingdaily.
The Jordan Times quoted Burj Al Hayat owner Nael iabat as saying that all of the nan- cial and technical elements of the deal had been concluded, with 600 visas having been obtained for the 300 Jordanian and 300 Iraqi drivers that will be driving the tankers. iabat added that more would be applied for in the future.
e Jordan Petroleum Re nery Co. (JPRC) has a processing capacity of 100,000 bpd, with crude mostly sourced from Saudi Arabia. Amman currently imports around 98% of its energy needs and consumes 134,000 bpd of oil.
A $1.6bn expansion project to add another 20,000 bpd to capacity (mostly diesel) remains ongoing, with JPRC most recently having awarded a contract to US engineering rm KBR for the design of a new residue hydro-processing unit.
MEMR oated the crude transport tender in March following the signing of a memorandum of understanding (MoU) between Amman and Baghdad in February.
e bilateral deal stipulated that the ows would cover around 7% of the Hashemite King- dom’s current demand, buying the oil at a $16 per barrel discount to Brent in order to cover the transport and deviation in speci cations. In return, Iraqi goods exported through the Jorda- nian Red Sea port of Aqaba will receive prefer- ential rates. e leaders also agreed that Jordan would begin supplying electricity to its neigh- bour, which lacks su cient power generation capacity to meet fast-growing domestic demand, “within two years”.
Speaking at the start of May, Jordan’s Energy Minister Hala Zawati said that the deal would lead to improvements in cross-border roads, transport and trade.
Concentrating on the conduit
She also highlighted the long-planned Bas- ra-Aqaba pipeline and e orts to link the two countries’ electricity grids as important areas ofongoingco-operationtiedtotheremitofthe new deal.
A 1,700-km crude export pipeline running from the main southern elds in Basra via Najaf and Anbar to Aqaba has been on the drawing board since the start of the decade. e planned conduit has been derailed by the political, nan- cial and contractual complexity of the scheme, compounded for three years by IS’ occupation of swathes of the north-west.
Since the militants’ expulsion in late 2017, the two parties have pledged several times to get the estimated $5bn scheme back on track, but with- out any concrete progress.
Following a meeting with Iraqi Oil Minister amir Ghadhban in late March, Zawati was quoted by the o cial Petra news agency as say- ing that preparations for the 1mn bpd link had been completed and that the project was now awaiting Iraqi cabinet approval.
In common with the other projects, the government failed to attract suitable private investors to implement the scheme under the intended build-own-operate-transfer (BOOT) model and the plan was suspended during the incursion by IS from 2014-2017.
The pipeline is an ambitious project that has been hampered by major security issues in the restive regions the planned route traverses. However, it makes a great deal of sense for both governments, with Iraq’s even more ambitious upstream targets hamstrung by a lack of spare export pipeline capacity and Jordan eager for greater security of supply given its relatively meagre conventional hydrocarbons reserves.
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w w w . N E W S B A S E . c o m Week 26 03•July•2019