Jordan to receive Iraqi oil soon - minister

(MENAFN - Jordan Times) AMMAN - Jordan will start receiving discounted Iraqi oil in the coming days, Minister of Energy and Mineral Resources Khalid Shraideh announced.The Jordan News Agency, Petra, quoted the minister as saying the supply would eventually cover Jordan's daily need of 100,000 barrels.

Shraideh said Jordan would begin by importing 10,000 barrels per day and would eventually increase the amount to cover the entire needs.

The first shipments are expected to arrive within days, the minister said, explaining that Jordanian tankers have already headed for the border to receive Iraqi tankers carrying crude oil from Kirkuk.

He said the choice was between Basra and Kirkuk oil, but because the Jordan refinery cannot process the oil from Basra, which has a high rate of sulphur, "we preferred to buy Kirkuk oil, which will be mixed with Arab light crude so that the refinery can process it".

The energy minister did not reveal the price Jordan would pay for the oil, but Prime Minister Marouf Bakhit said in October that the Kingdom would receive preferential rates.

Iraqi Finance Minister Baqir Jabr Zubaidi has said in previous remarks that the price would be lower than the market price by $18.

Jordan and Iraq signed the deal last August when Bakhit made a surprise visit to Baghdad.

Before the war started in 2003, Iraq covered all of Jordan's oil needs, delivering a portion for free and the rest at about one-third of the world market price.

When the supply was halted at the outset of the war, Saudi Arabia, Kuwait and the United Arab Emirates stepped in for a year to provide the Kingdom with oil at prices believed to have been below market levels. Saudi Arabia now provides Jordan with funding to help the country pay for its oil need.

Under last year's deal, oil supplies from Iraq to Jordan were due to begin in September 2006 but have been delayed for technical and security reasons.Shraideh said the first delivery of Iraqi crude will be considered as a "trial phase to deal with security conditions".

The Iraqi security forces will be escorting the tankers from Kirkuk through the restive Diyala province to the border with Jordan, according to the minister.

Shraideh did not link between the expected Iraqi oil shipment and the government's pledge to address a growing budget deficit through other options.

Bakhit announced earlier in the week that there would be no hike in fuel prices despite the rise in international oil prices, adding the government would find alternatives to tackle the JD710 million deficit expected this year.

But leading economic analyst Yusef Mansur said to address the budget deficit, oil supplies, even at cheaper prices, are not the only answer.

"We need quality spending, rationalised consumption of fuel and energy alternatives.

"Mansur also called for transparency, saying "the government's oil deals have always been vague."

Even if the alternatives promised are there, the expert said, the government will inevitably raise the prices next year with the end of the Jordan Petroleum Refinery Company's 50-year monopoly.