US embassy cable - 03AMMAN3931

UNCLAS SECTION 01 OF 02 AMMAN 003931 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR 4520/ITA/MAC/ONE/PTHANOS 
STATE PASS TO TDA FOR STEINGLASS/SIGLER 
STATE PASS TO OPIC 
 
E.O. 12958: N/A 
TAGS: EINV, ETRD, ENRG, JO 
SUBJECT: OIL AND JOBS FOR JORDAN: AMERICAN FIRM HAS BIG 
PLANS 
 
SENSITIVE BUT UNCLASSIFIED 
 
1.  (SBU) SUMMARY: Washington Group International (WGI) 
executives updated post on lurching, but continuing, progress 
on the commissioning of a magnesium oxide plant for the Arab 
Potash Company (APC) and shared ideas on proposed energy 
synergies that could result in significant cost savings and 
job growth in Jordan's Dead Sea area.  They also told the 
Ambassador that WGI would seek TDA support for a feasibility 
study of a newly developed oil shale extraction process that 
would enable the company to produce over 100,000 barrels of 
crude oil per day in Jordan at economical production costs. 
  END SUMMARY 
 
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MAG OXIDE PLANT: NOT OUT OF THE WOODS YET 
----------------------------------------- 
 
2.  (SBU) WGI Executive Vice President Gil Clausen and Vice 
President James Shultz paid a courtesy call on Ambassador 
Gnehm and Econoffs June 25.  The purpose of their visit was 
to update the Ambassador on current projects, WGI's 
relationship with the Arab Potash Company (APC), and 
prospects for new sources of energy and fuel in Jordan.  WGI, 
a global engineering, construction, environmental and mining 
company is nearing completion of a magnesium oxide producing 
plant in Jordan for APC. 
 
3.  (SBU) WGI took over the contract from a pair of German 
and Turkish companies to build the magnesium oxide plant and 
bring it into operation.  Clausen said that although the 
German and Turkish companies left a mess behind them, the 
plant was presently in its final commissioning stages. 
However, difficult market conditions, which include prices 
that are below "economic feasibility", and an extremely 
competitive environment, meant that the project was not "out 
of the woods" yet.  Clausen said despite the questionable 
economics of the project, WGI was still looking forward to 
its completion and hopeful of its success. 
 
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AND JOBS AS WELL 
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4.  (SBU) More broadly, Clausen said that Dead Sea mining had 
vast unexploited commercial and economic potential.  He said 
WGI looked at the sector in its entirety, in contrast with 
the GOJ's "one project at a time" view of the region and its 
potential.  He said that the area's main need was for energy. 
 Construction of a power plant fired by natural gas piped in 
from Egypt via Aqaba could provide power for APC, Jordan 
Bromine, the magnesium oxide plant, a possible future 
magnesium metal plant, and, potentially, for Israeli industry 
on the other side of the Dead Sea.  Clausen said an 
"independent power complex on the Dead Sea" could fulfill the 
entire 220 megawatt need of the mining concerns on the 
Jordanian shore of the Sea and still have some surplus gas 
available for sale.  He said he had discussed the idea with 
Planning Minister Bassem Awadallah, who was also in favor of 
the project.  Clausen said the project would provide 10,000 
jobs in the currently impoverished region. 
 
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OIL IN JORDAN? 
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5.  (SBU) Meanwhile, Clausen told us that a newly-developed 
extraction process could enable WGI to extract from 100,000 
to 200,000 barrels of crude oil per day from oil shale 
deposits found south of Amman.  Previously recovery costs for 
these deposits had been too high to be economical, but the 
process, developed by Sun Corporation of Canada, could 
produce from 50,000 to 70,000 barrels per day initially, with 
"centuries of reserves" at production costs of $8-10 per 
barrel.  He added that the economics on the project "have 
been reviewed" and that WGI has the right team in place to 
make it happen.  He said that WGI executives have been 
consulting with GOJ officials, including Awadallah and 
Minister of Energy Bataineh, who are eager to get the project 
on the fast track.  The next step, Clausen said, was a 
full-blown feasibility study, about which it would soon be 
approaching the US Trade and Development Agency (TDA). 
 
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COMMENT 
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6.  (SBU) WGI's comprehensive approach to Dead Sea mining 
merits consideration by the TDA, the GOJ, and interested 
foreign investors.  If the company's projections on the oil 
shale and the natural gas plant are realized, the economic 
impact on Jordan and the Dead Sea mining sector may be 
significant.  Post will continue to monitor the progress of 
all of WGI's projects, current and proposed, and will lend 
support when appropriate.  END COMMENT 
 
 
 
 
GNEHM