US embassy cable - 03AMMAN4247

C O N F I D E N T I A L AMMAN 004247 
 
SIPDIS 
 
E.O. 12958: DECL: 07/10/2013 
TAGS: ENRG, PREL, IZ, JO 
SUBJECT: JORDAN SEEKS TO SECURE SUPPLY OF IRAQI OIL 
 
Classified By: Ambassador Edward W. Gnehm for reasons 1.5 (B)&(D). 
 
1. (C) During a 9 July meeting, Jordanian FM Marwan Muasher 
raised with Ambassador the status of a proposed trip to 
Baghdad by a Jordanian interministerial team.  The purpose of 
the visit would be to follow-up at a technical level on a 
conversation Industry & Trade Minister Salah al-Bashir had 
with CPA Advisor Reuben Jeffery during the Dead Sea World 
Economic Forum meeting, and to discuss arrangements for the 
commercial supply of Iraqi crude oil to Jordan.  The Foreign 
Ministry will be providing a proposed delegation list to post 
shortly.  Trade Minister al-Bashir, following up on his 
commitment to Jeffery, has also provided a "non-paper" 
listing the other issues the delegation wishes to discuss. 
Post will provide this to CPA and NEA. 
 
2. (C) Ambassador informed Muasher that the embassy had not 
yet received a reply from CPA to the request for meetings in 
Baghdad, but was continuing to work the issue.  Muasher 
stressed that the delegation wished to travel to Iraq as soon 
as possible and lock in an oil supply deal before Jordan 
faced an oil shortage, possibly by the end of July.  Muasher 
explained that Saudi Arabia continued to supply Jordan with 
the 50,000 bbl/day it had pledged, but nevertheless the GOJ 
was compelled to draw down its stocks by roughly 40,000 
barrels a day to meet domestic consumption requirements. 
 
3. (C) While Kuwait had provided oil, the Kuwaiti oil was 
incompatible with Jordan's refinery and had to be sold to 
finance the purchase of compatible crude.  This had upset 
some Kuwaiti officials, who stopped crude deliveries to 
Jordan.  Muasher called the Kuwaiti Minister of State for 
Foreign Affairs, Sheikh Mohammad, who promised to resolve the 
problem.  Muasher added that the United Arab Emirates had 
delivered only two of its promised payments, further 
exacerbating the situation. 
 
4. (C) Ambassador mentioned that U.S. supplemental assistance 
was intended to solve just such problems and permit Jordan to 
purchase the crude it needed on the open market.  Muasher 
agreed, but said that Iraq represented the least expensive 
source of oil for Jordan, even at market prices (which the 
GOJ is ready and willing to pay), and that it was only 
logical for the GOJ to actively pursue the cheapest available 
option.  Hence, the Jordanians wanted to reach an agreement 
quickly with the CPA to re-establish Iraq as a supplier of 
crude to Jordan. 
 
5. (C) Ambassador cautioned Muasher to be pragmatic in 
considering the early resumption of Iraqi crude deliveries. 
The lack of security in Iraq and the ongoing problems in 
raising production levels were real uncertainties and 
concerns.  As Jeffery had told the Jordanians at the WEF 
Summit, crude production first would be used to meet domestic 
Iraqi needs -- then come exports.  Muasher said he 
understood, but reiterated that the GOJ hoped to confirm its 
requested meetings with the CPA as soon as possible and to 
negotiate a supply agreement before Iraqi oil production was 
committed elsewhere. 
GNEHM