Page 7 - MEOG Week 29 2021

MEOG PIPELINES & TRANSPORT MEOG

Iraq and Jordan

renew oil supply deal

IRAQ/JORDAN THE governments of Iraq and Jordan last week The deal was extended in late January 2021
extended their existing contract for the supply after a meeting between Prime Ministers
of 10,000 barrels per day (bpd) of oil for another Mustafa al-Kadhimi and Bisher al-Khasawneh.
year. Abdul Jabbar said last week that the Iraqi Cabi-
The announcement of the agreement fol- net had approved the renewal of the supply con-
lowed a meeting in Baghdad between Iraqi Oil tract for 10,000 bpd of crude.
Minister Ihsan Abdul Jabbar and his Jordanian
counterpart, Hala Zawati. Connectivity
The pre-existing bilateral deal was signed in The oil minister also noted that Baghdad and
February 2019 for Iraq to cover around 7% of Amman were still discussing the 1mn bpd
Jordan’s oil demand. After lengthy delays, the Basra-Aqaba crude oil pipeline, with investiga-
first batch of Iraqi crude was trucked from Baiji tions ongoing among technical and commercial
to Jordan via Kirkuk in September that year. committees.
At the time, it was reported that Jordan would Abdul Jabbar noted: “We aim to achieve
purchase the oil at a $16 per barrel discount to economic and commercial feasibility in a way
Brent in order to cover the transport and devia- that supports sustainable development plans,
tion in specifications, with Iraqi goods exported and that it adds economic value for the two
through the port of Aqaba receiving preferential countries.”
rates in return. Contract winners for work on the long-de-
However, in early January, in an interview layed, $5bn project had been expected by the end
with the Iraq News Agency (INA), Alaa al-Ya- of 2020, but deliberations were held up by issues
siri, general manager of Iraq’s state oil marketer relating to the pandemic.
SOMO, said: “The Oil Marketing Company In May 2020, the MoO clarified that the pipe-
does not have differential prices, but rather fixed line inside Iraq would be installed according to
prices according to the market … Jordan stip- the engineering, procurement, construction, and
ulated that, according to the Cabinet’s decision, financing contract (EPCF) model, while in Jor-
the transportation cost was calculated at $11 dan it will be executed under the build-own-op-
from Baiji to Jordan, and this is among the items erate-transfer (BOOT) system.
of bilateral agreements between the two coun- The Jordanian government has also approved
tries, and the supreme interest is valued by the a deal with the Iraqi federal government to build
country and the government.” two oil and gas pipelines connecting the neigh-
Shipments were severely affected by the pan- bouring countries.
demic and the resultant drop in oil price led to The project is divided into two phases, the
several pauses in supplies, and no crude at all first phase includes installing a 700-km pipeline
sent to Jordan in August 2020. with a capacity of 2.25mn barrels from Rumaila
Cargoes resumed in September following a to Haditha; the second phase includes installing
July agreement between Amman and Baghdad a 900-km pipeline in Jordan between Haditha
on the resumption of oil exports, with Iraq com- and Aqaba with a capacity of 1mn barrels.
pleting all of the required logistical preparations. Total cross-border capacity is anticipated to
Zawati said that crude flows had stopped after be 1mn bpd of oil and 258mn cubic feet (7.3mn
prices fell below $20 per barrel. cubic metres) per day of gas.™

Week 29 21•July•2021 www. NEWSBASE .com P7