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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?

    Rocky
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    The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss? Empty The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?

    Post by Rocky Thu 25 Apr 2024, 2:33 pm

    The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?
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    Baghdad today - follow-up
    In the past few days, calls have been raised to stop supplying Iraqi oil to Jordan at “preferential prices,” on the grounds that this represents “a waste of the country’s resources .”
    These calls are not new, but they were renewed following Jordan's participation in confronting Iranian missiles and drones that were heading to Israel last week .
    On Wednesday, a joint Jordanian-Kuwaiti statement regarding regulating navigation and borders between Iraq and Kuwait gave new impetus to talk about “the necessity of depriving Jordan of Iraqi oil .”
    The joint Jordanian-Kuwaiti statement, at the conclusion of the visit of the Emir of Kuwait, Sheikh Meshal Al-Ahmad, to Jordan, on Wednesday, and his meeting with the Jordanian monarch, King Abdullah II, called for adherence to the maritime navigation and border agreement between Iraq and Kuwait .
    Social media users circulated the statement, attaching it to data on the quantities of oil that Iraq exports to Jordan at a “symbolic price,” considering that Amman’s policies “are not compatible with Baghdad’s policies .”
    Last February, an Iraqi parliamentarian collected signatures to issue a decision to stop oil exports to Jordan. This was preceded by statements from an Iraqi parliamentarian last November, who said that “Jordan’s positions have always been hostile towards Iraq, especially with the Popular Mobilization Forces.” 
    The economic and financial advisor to the Iraqi government, Mazhar Saleh, explains that Jordan has been importing Iraqi oil for decades, and the organization of agreements in this regard dates back to before 2003 .
    He explains that from 1980 until 1990, the Kingdom of Jordan was receiving shares of “thousands of barrels of oil per month, which were transported overland, as part of aid from Baghdad to Amman, as Iraq at that time and the Arab oil surplus countries were providing oil aid to non-producing countries .”
    He continues, "During the years between 1990 and 2003, Iraq was subject to an economic blockade imposed by the United Nations Security Council, in accordance with Chapter Seven of the United Nations Charter." He explained that Jordan was the only country that was allowed to conclude the "Iraqi-Jordanian Protocol " agreement.
    He points out that “it was allowed to exchange quantities of crude oil transported by Jordanian trucks at prices that included a 15 percent discount on international prices, in addition to about 30,000 barrels per day sent free of charge to Jordan.” The protocol’s ceiling for exchanging oil for Jordanian products was approximately $450 million annually .
    After 2003, that is, after the change of the political regime in Iraq, Saleh says, “the Jordanian refinery continued to rely on refining Iraqi crude of a specific quality, and it was transported from Iraq to Jordan via trucks at a discount on prices of about 15 percent, which averaged 250 thousand.” barrels per month .
    During 2006, the two sides signed a memorandum of understanding stipulating the supply of 10,000 barrels of oil per day to Jordan, at a discount of $18 from the world price .
    In 2008, the memorandum of understanding was amended to become the discount rate of $22 per barrel .
    During the years 2015 to 2019, shipments of Iraqi crude oil by land via tankers stopped, after the terrorist organization ISIS took control of areas in western Iraq in 2014 .
    In February of 2019, Jordan signed a memorandum of understanding under which the Kingdom would import Iraqi crude oil, from Kirkuk fields, at a rate of 10,000 barrels per day, which constituted 7 percent of the Kingdom’s total needs at the time .
    In late 2019, Iraqi oil shipments returned to Jordan, according to the memorandum of understanding that allows the Kingdom to purchase crude oil from the Iraqi Kirkuk fields at prices equivalent to Brent crude, deducting from it the transportation costs and the difference in specifications, which range from $16 per barrel less than the world price .
    The value of the discount granted at the preferential prices, which is $16 per barrel, is estimated at about $160,000 per day, that is, less than $5 million per month, and about $58 million annually, in the event that the supply of oil continues without interruption on a daily basis from Iraq to Jordan for a quantity of 10,000 barrels. Daily .
    In March 2023, the Iraqi Council of Ministers agreed to renew the memorandum of understanding that provides Jordan with crude oil at preferential prices .
    The Iraqi economic expert, Nabil Al-Marsoumi, put together a summary of Iraq’s supply of oil to Jordan and the pricing mechanism, which included free quantities or discounts .
    The academic said in a post on his Facebook account, “Iraq used to export to Jordan during the time of the previous regime 100,000 barrels per day, half of it for free and the other half at preferential prices. In 2006, (the Iraqi government and Jordan) signed a memorandum of understanding to prepare and transport Iraqi crude oil to Jordan for 10,000.” A barrel per day of crude oil, rising to 15 thousand barrels, to be increased in the future to 30 thousand barrels at a discount of up to $18 per barrel from the international price. The price of Brent crude oil was increased in 2008 to $22 per barrel instead of $18 per barrel .”
    He adds: "The memorandum that was signed between the two sides on February 2, 2019, in which Iraq exports 10,000 barrels per day to Jordan, is an exact copy of the previous memorandum, except that the price equation is two dollars less. Instead of 18 dollars, it was agreed upon 16 dollars less." of the price of Brent oil (about 13 dollars less than the average selling price of Iraqi oil in international markets) covers the cost of transportation between Kirkuk and Zarqa, with differences in the quality of Kirkuk crude oil from Brent crude oil. The quantity exported to Jordan has recently been increased to 15 A thousand barrels per day . 
    Jordanian financial and economic expert, Wajdi Makhamreh, says that “Jordanian-Iraqi relations are rooted throughout the political regimes of the past decades,” noting that “the Kingdom has always been supportive of Iraq in all its stages .”
    He explained in response to Al-Hurra website’s inquiries that “Iraqi oil contributed in previous years to maintaining acceptable fuel prices in the Jordanian market, but during the past two decades, and with the global rises and the special taxes imposed on derivatives, the citizen does not finally feel the impact of the discounts in Oil prices .”
    Makhamra expresses his surprise at "the use of oil at preferential prices as a pressure card linked to political files," noting that Jordan's position has long been supportive of issues related to Iraq, but it seems that pro-Iranian movements or militias do not want the continuation of strategic relations between the two countries.
    In early January, 9 lawyers filed a lawsuit against Iraqi Prime Minister Muhammad Shiaa Al-Sawadni, to stop the export of Iraqi oil to Jordan, considering it a “waste of the country’s money,” after American strikes targeted Iraqi militias .
    Late last year, Iraqi militias and factions prevented tanks loaded with oil from crossing to return to Jordan, and threatened to burn the tanks .
    Iraqi economic researcher, Abdul Salam Hussein, says that “oil contracts, as long as they are signed with the Iraqi government, are considered effective even if there are objections to them .”
    He asserts that lawyers or citizens have the right to file lawsuits for what they see as wasteful, but “the Federal Court has said its decisive word in this context .”
    The economic researcher calls for “not mixing economic and political issues with each other,” as some object to what they see as “Jordanian political practices that are not consistent with what they see as appropriate,” saying: “In the end, binding international agreements and contracts should not be attacked .”
    Hussein pointed out that the constitution allows for the cancellation of international agreements or memorandums of understanding, but “you need positive reasons, and knowledge of the financial impact that may occur on the country if there are penal conditions,” pointing out the possibility of “amending memorandums of understanding upon renewal .”
    The lawyers said in the lawsuit they filed in the Federal Court that the agreement signed in 2021 “led to Iraq losing about 1.5 million dollars per month .”
    The Federal Court rejected the lawsuit and challenged the price difference mentioned by the lawyers, noting that the decrease in price from Brent crude “is due to its low quality,” according to the memorandum of understanding signed between the two countries .
    The Federal Court indicated in its decision in January that “there is no financial harm to Iraq (due to the Kingdom’s preferential oil prices), taking into account the facilities provided by the Jordanian side by reducing fees and interest on Iraqi goods imported through the port of Aqaba .”
    In 2021, the memorandum of understanding between Iraq and Jordan was renewed to export 10,000 barrels, which can be increased by agreement of both parties, at a discount of $16 per barrel .
    During the past months, Iraq increased the quantities it supplies to Jordan at preferential prices to 15,000 barrels per day, which meets about 15 percent of Jordan's daily need for oil, at a discount price of $16 per barrel .
    The value of this discount amounts to about 240 thousand dollars per day, or about 7.2 million dollars per month, or more than 86 million dollars annually, assuming that the export movement is not interrupted .
    The Iraqi academic and economic expert, Nabil Al-Marsoumi, says that it affects Iraqi-Jordanian economic interests “if the news is true about the participation of the Jordanian Air Force in bombing Iraqi sites” at the beginning of this year .
    These areas include "the preferential oil prices that the Kingdom receives, not to mention the trade relations between the two countries." Below are the details, according to a post by Al-Marsoumi on his Facebook account :
    1-  Iraq sold about 15 thousand barrels per day to Jordan at prices less than $16 less than the price of Brent crude .
    2-  Exempting a large number of Jordanian goods exported to Iraq from customs duties .
    3-  Jordan exports goods worth $640 million to Iraq, constituting about 45 percent of total Jordanian exports abroad .
    4-  Jordan grants facilities for Iraqi goods imported through Aqaba, whose final destination is Iraq, a discount of 75 percent of the handling fees charged by the Aqaba Economic Authority, which has a negative impact on the volume of foreign trade through Iraqi ports .
     
    5-  There is an electrical interconnection project to supply Jordan to Iraq with 150 megawatts in the first phase, then 500 megawatts in the second phase, then 900 megawatts in the third phase .
    6-  Planning is underway to build industrial cities and free trade zones between Iraq and Jordan to stimulate trade exchange between them and develop industry there .
    7-  Aborting the framework agreement for the Iraqi-Jordanian oil pipeline, which will extend from Basra via Haditha to Aqaba .
    The Jordanian expert in the oil sector, Amer Al-Shoubaki, says that Iraq, since the beginning of its oil production at the beginning of the twentieth century, “was always looking for alternatives to exporting crude, and found what it needed by exporting it overland through Jordan, and then transporting it by sea from the Jordanian port of Aqaba .”
    He explains that "Iraq during that period was rewarding Jordan by giving it free quantities, and quantities at preferential prices. In return, it allowed Iraqi oil to be exported through the Jordanian port, and this continued until 2003. "
    During the first years after 2003, Al-Shobaki continues, “Due to the security instability in Iraq during wartime, oil continued to be exported through Jordan, in addition to being exported through the Basra Oil Port .”
    Al-Shoubaki reveals that the preferential prices for Iraqi oil have other reasons “related to the quality and type of Iraqi crude from some production sources, in addition to bearing the cost of transportation and storage from Kirkuk if it were to be exported from the port of Basra, or what is called the supplier’s premium, so that the price is net from the source of production.” Even the Jordanian oil refinery, this does not mean losing Iraq .”
    He confirms that in the end, the Iraqi government “does not lose or bear costs from selling at preferential prices to Jordan. What is discounted at the price is usually given as part of the supplier’s premium, and Jordan in the end benefits at a rate of $9 per barrel of oil from Iraq .”
    The expert points out that Iraqi oil “covers about 15 percent of the Jordanian market’s need,” and if Iraqi oil stops, “the Jordanian government’s loss is estimated at $49 million, and this matter will affect the shipping sector, as hundreds of oil tankers operate in Jordan and Iraq .”
    On April 9, 2013, Jordan and Iraq signed an agreement to extend a 1,700 km pipeline to transport oil from Basra to the export ports in Aqaba, at a cost of about 18 billion dollars and a capacity of one million barrels per day, according to Agence France-Presse .
    The pipeline is supposed to transport crude oil from the giant Rumaila field in Basra, 545 km south of Baghdad, to the export ports in the port of Aqaba, 325 km south of Amman .
    Iraq, which has oil reserves estimated at about 143 billion barrels, hopes that the construction of this pipeline will increase its oil exports and diversify its outlets .
    In March, Iraq announced an electrical connection line with Jordan, and the inauguration of an electricity line that would allow it to import energy .
    The Jordanian oil expert, Al-Shoubaki, points out that since the beginning of the war in Gaza, “political currents loyal to Iran have been active in exploiting any opportunity to raise the issue of selling Iraqi oil at preferential prices to Jordan, not for reasons related to Iraqi interests as much as they are in implementation of agendas that are not Iraqi at all .”
    The advisor to the Iraqi Prime Minister, Saleh, says that “forces in Iraqi public opinion do not see a justification for the privilege granted to Jordan of preferential oil prices,” but “the general Arab situation, and Iraq being a country rich in oil resources, requires it to extend a helping hand and assistance to its neighboring countries.” Such as Jordan, and even Lebanon, which Baghdad helped a lot to solve its electricity fuel shortage crisis over the past years, by offering discounts on oil prices.”
     
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