Page 6 - MEOG Week 05 2021

MEOG PIPELINES & TRANSPORT MEOG

Iraq and Jordan renew oil supply deal

IRAQ/JORDAN THE governments of Iraq and Jordan last week country and the government.”
renewed an oil supply contract following a meet- Flows were steady from September 2019 until
ing between Prime Ministers Mustafa al-Ka- April 2020, giving a cumulative total of 2.44mn
dhimi and Bisher al-Khasawneh. barrels before cargoes began being unloaded
The two parties said that “issues of common into Jordanian trucks at the border in an effort
concern” had been discussed during the meet- to halt the spread of coronavirus (COVID-19).
ing, noting that they had sought “to achieve Shipments were severely affected by the pan-
integration of interests and strategy and in all demic and the resultant drop in oil price with
economic, investment and trade fields.” several pauses in supplies and no crude at all
Ties between Amman and Baghdad have sent to Jordan in August. Cargoes resumed in
strengthened in recent years and their mutual September following a July agreement between
interest in the success of this deal was revealed Amman and Baghdad on the resumption of oil
by way of an addition to the 2019 agreement exports, with Iraq completing all of the required
which covered 10,000 barrels per day (bpd) of logistical preparations. Jordanian Energy Min-
crude oil supplies. Last week’s ‘reactivation’ of the ister Hala Zawati said that crude flows had
deal also included continued implementation of stopped after prices fell below $20 per barrel.
a 300-km dual-circuit electric antenna transmis- Local media noted that the latest talks had
sion line that connects Jordan’s Risha conversion also covered the long-delayed 1mn bpd Bas-
station and Iraq’s al-Qaim substation. This will ra-Aqaba crude oil pipeline.
provide around 1,000 GWh per year of electric- While no agreement was made, both sides
ity to Iraq. The two governments signed a deal agreed to continue talks until a “a framework
last year that sought to interconnect the coun- agreement between the two countries” is in
tries’ electricity grid as part of a wider ‘Gulf Grid’ place.
as Iraq attempts to wean itself off its reliance on Preliminary work to develop the $5bn con-
Iranian electricity. duit is thought to be nearing, with the Iraqi
The pre-existing bilateral deal was signed in Ministry of Oil (MoO) expected to announce
February 2019 for Iraq to cover around 7% of contract winners by the end of the year. In May,
Jordan’s oil demand. After lengthy delays, the the ministry clarified that the pipeline inside Iraq
first batch of Iraqi crude was trucked from Baiji would be installed according to the engineering,
to Jordan via Kirkuk in September that year. procurement, construction and financing con-
At the time, it was reported that Jordan would tract (EPCF) model, while in Jordan it would be
purchase the oil at a $16 per barrel discount to executed under the build-own-operate-transfer
Brent in order to cover the transport and devia- (BOOT) system.
tion in specifications with Iraqi goods exported The Jordanian government has also approved
through the port of Aqaba, receiving preferential a deal with the Iraqi federal government to build
rates in return. two oil and gas pipelines connecting the neigh-
However, in early January, in an interview bouring countries, Jordanian state-run news
with the Iraq News Agency (INA), Alaa al-Ya- agency Petra reported.
siri, general manager of Iraq’s state oil marketer The project is divided into two phases: the
SOMO, said: “The Oil Marketing Company first phase includes installing a 700-km pipeline
does not have differential prices, but rather fixed with a capacity of 2.25mn barrels from Rumaila
prices according to the market … Jordan stip- to Haditha; the second phase includes construct-
ulated that, according to the Cabinet’s decision, ing a 900-km pipeline in Jordan between Hadi-
the transportation cost was calculated at $11 tha and Aqaba with a capacity of 1mn barrels.
from Baiji to Jordan, and this is among the items Total cross-border capacity is expected to be
of bilateral agreements between the two coun- 1mn bpd of oil and 258mn cubic feet (7.31mn
tries, and the supreme interest is valued by the cubic metres) per day of gas.™

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