Iraq Boosts Oil Supplies to Jordan

- Iraq Boosts Oil Supplies to Jordan

Wednesday, June 22, 2011
Knight Ridder/Tribune Business News
by Taylor Luck, Jordan Times, Amman

Jordan has started receiving additional oil supplies from Iraq as officials in Amman continue to explore alternatives to address the Kingdom's energy woes.

According to Minister of Energy and Mineral Resources Khaled Toukan, Jordan has started to receive 15,000 barrels of Iraqi oil daily as part of an agreement struck between Baghdad and Amman earlier this month.

Also under the deal, signed during a visit of Prime Minister Marouf Bakhit to Baghdad, the Kingdom receives 30,000 tonnes of heavy fuel oil per day from Iraq at an $88 per tonne discount.

The boost in Iraqi oil comes amidst a drop in Egyptian gas supplies, which Jordan relies on for 80 percent of its electricity needs. Iraqi heavy fuel oil accounts for the remaining 20 percent.

Jordan currently receives 100 million cubic feet of natural gas from Egypt daily, well below the 250 million cubic feet stipulated in an amended agreement between the two sides, Toukan said.

Officials expect increased amounts of Egyptian gas by July, but remain sceptical of the reliability of supply -- particularly after attacks on the Arab Gas Pipeline earlier this year led to two separate six-week disruptions forcing the country's power plants onto their costly diesel reserves.

Facing popular pressure at home, Cairo made amending a 12-year agreement between the two sides a condition to resuming gas supplies, which the Kingdom previously received at preferential prices of less than half of the international rate.

Meanwhile, the government is set to float a tender in November for the construction of an offshore gas terminal to receive and transport liquid gas to Amman.

According to Toukan, Jordan has received interest from several international firms in the terminal, to be built off the Port of Aqaba within the next two years.

The government has received expressions of interest from British Petroleum, Royal Dutch Shell, GDF Suez, Qatar Gas Cooperation and Lemont/General Electric, among others.

Jordan's drive for liquid gas comes as part of officials' efforts to cover a five- to six-year "gap period" ahead of the development of domestic energy sources including wind, solar and nuclear power.

Copyright (c) 2011, Jordan Times, Amman

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