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- TUESDAY, 07-16-2024, PM 7:03
- KARAR AL-ASADI
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For more than 40 years, Iraq has been supplying Jordan with crude oil at “preferential prices,” despite the ongoing losses it incurs as a result of the agreement concluded between the two countries, estimated at more than $57 million annually, which it could have benefited from if it had sold the oil according to global oil prices, which has created a new door of waste added to its predecessors in light of the difficult economic challenges.
In a new development, Jordan recently addressed the Iraqi government regarding extending the memorandum of understanding on importing oil at reduced prices, which is supposed to expire on August 4, but with a new increase in the quantity of imported oil, which raises many questions about the possibility of the government’s approval in light of these losses.
Jordanian Minister of Energy and Mineral Resources Saleh Al-Kharabsheh said that “the Hashemite Kingdom of Jordan’s imports of Iraqi oil during the period from May 4, 2023 to June 30, amounted to nearly 5 million barrels,” noting that “the imports were transported from the modern Iraqi Kirkuk warehouse to the Jordanian oil refinery site in Zarqa Governorate, by Iraqi and Jordanian tankers.”
Jordan imports Iraqi crude oil in implementation of the memorandum of understanding for the supply of crude oil signed between the government of the Hashemite Kingdom of Jordan and the government of the Republic of Iraq on May 4, 2023, according to Al-Kharabsheh.
Under the memorandum, the Jordanian side will purchase Iraqi crude oil, based on the monthly Brent crude oil rate minus $16 per barrel to cover the difference in quality and transportation costs, in order to meet 7% of the Kingdom’s crude oil needs, as indicated by the Jordanian Minister of Energy and Mineral Resources.
Al-Kharabsheh pointed out that “discussions were held with the Iraqi side to increase the quantities of Iraqi oil to Jordan and a joint agreement was reached between the two sides to increase the quantities of Iraqi crude oil, as the Iraqi Council of Ministers agreed to increase the quantities of Iraqi crude oil exported to Jordan from (10) thousand barrels per day to (15) thousand barrels per day.”
He stated that “the increase agreement was implemented, starting from August 2023, and with the same contractual terms included in the memorandum of understanding, and all necessary technical and logistical arrangements were made to transport these quantities from the oil loading site in Iraq to Jordan, according to Al-Kharabsheh.”
The Jordanian Minister of Energy stated that “the monthly quantity of Iraqi crude oil exported to Jordan has increased to about 450,000 barrels per month, instead of 300,000 barrels per month, which constitutes about 10% of the Kingdom’s crude oil needs,” noting that “the memorandum of understanding has been extended for an additional 3 months and under the same contractual terms from the date of the memorandum of understanding’s expiration on May 4, 2024 until August 4, 2024, in order to transfer the remaining and unsupplied quantities stipulated in the memorandum of understanding.”
Al-Kharabsheh added that “the Iraqi side was addressed to renew the memorandum of understanding between the two brotherly countries.”
Meanwhile, the Director of Oil and Natural Gas at the Ministry, Iman Awad, revealed that “the Ministry is currently following up with the Iraqi side to sign a new memorandum of understanding between the two parties.”
According to the specialized energy platform, Jordan's imports of Iraqi oil during the year 2023 recorded an increase of more than 55% compared to the levels recorded in 2022, which provided a large portion of Jordan's fuel needs.
On February 4, the Iraqi Oil Marketing Company (SOMO) revealed that Iraq sold its oil to Jordan at $13 less than the official price.
Over the past months, Iraq has increased the quantities it supplies to Jordan at preferential prices to 15,000 barrels per day, which covers about 15 percent of Jordan's daily oil needs, at a discounted price of $16 per barrel.
The value of this discount is about $240,000 per day, or about $7.2 million per month, or more than $86 million per year, assuming that the export movement is not interrupted.
During the past two weeks, calls have been renewed to stop supplying Jordan with Iraqi oil at “preferential prices,” on the grounds that this represents a waste of the country’s resources. This came in the wake of Jordan’s participation in confronting Iranian missiles and drones that were heading to Israel.
Oil expert Hamza Al-Jawahiri confirmed in a previous press statement that “huge losses result from this agreement, especially with the rise in oil prices, estimated at about 5 million dollars per month, and this is in vain and Iraq can invest it in construction or other important projects.”
In early January 2023, 9 lawyers filed a lawsuit against Iraqi Prime Minister Mohammed Shia al-Sudani, to stop the export of Iraqi oil to Jordan, considering it a “waste of the country’s money,” after American strikes targeted Iraqi armed factions.
In late 2023, Iraqi factions prevented oil tankers from crossing back to Jordan, and threatened to burn the tankers.
It is noteworthy that the Iraqi Parliament has called for stopping oil exports to Jordan, as Zainab Al-Moussawi, a member of the parliamentary Oil, Gas and Natural Resources Committee, had confirmed on November 8, 2023, that Jordan’s positions are “always hostile” towards Iraq, especially with the official Popular Mobilization Authority.
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