December 24, 2001	Monday	Shawwal 8, 1422

BAGHDAD, Dec 23: Iraq and Jordan on Sunday renewed an annual oil agreement worth 700 million dollars under which Baghdad will supply the kingdom with its crude oil and by-products needs for 2002.

Iraq’s Oil Minister Amir Muhammed Rasheed and Jordan’s Energy and Mineral Resources Minister Mohammed Batayneh signed the deal in Baghdad after three days of discussions.

Batayneh told Reuters, “Our Iraqi brothers have agreed to meet all Jordan’s needs of crude oil and its derivatives with an increase of three to five percent over figures of 2001.”

Jordan’s oil imports from Iraq in 2001 are expected to reach around four million tonnes of crude and one million of oil products at the end of this month.

Since the 1991 Gulf war, in which Amman sympathized with Baghdad, Iraq has exported around 80,000 barrels per day to Jordan under disclosed concessionary terms that ease the burden of Jordan’s deficit-ridden budget.

Batayneh said both sides agreed to implement a previous pricing formula. According to this year’s agreement, the price ceiling is $20 a barrel, after which there is a discount of 40 percent for every increase over $20. There is an additional special discount of $3 a barrel regardless of the price of oil.

That pricing formula was agreed on for Jordan’s oil imports for 2001 when oil prices at the beginning of the year were high.

“There is a preferential pricing formula for Jordan and we have agreed to continue working on that formula,” Batayneh said.

Jordan’s oil purchases from Iraq are exempted from U.N. sanctions that ban Baghdad from freely exporting its oil after its 1990 invasion of Kuwait.

NEW OIL PIPELINE: The Jordanian minister said they discussed a pipeline both countries are planning to construct to carry Iraqi crude oil to Jordan. Rasheed said at the start of the talks work on the pipeline would start in a few months and it would be completed in two years.

Earlier this month, Jordan said it was seeking bids from foreign firms to build the new pipeline to transport Iraqi crude to its sole refinery and replace the current cumbersome export of crude by trucks.

The $350 million pipeline, agreed with Iraq in 1998, will extend from the Iraqi pumping station in Haditha, 260 km (160 miles) northwest of Baghdad, to Jordan’s refinery of Zarga, northeast of Amman.

“The first stage of the pipeline starts from the Iraqi- Jordanian border to the oil refinery and the second stage will be inside Iraq,” Batayneh said.

Iraq and Jordan also renewed an annual trade protocol to maintain their two-way trade. The protocol, signed by the two countries’ trade ministers, records a fall in Jordan’s exports to Iraq from 2001 figures of $450 million to $260 million in 2002.

“The sharp slide in oil prices this year from last year’s has caused a fall in the value of the protocol,” Iraq’s Trade Minister Mohammed Mehdi Saleh told reporters after the signing ceremony. “Initial estimate puts the value of the protocol at $260 million,” he said.

“The volume of the protocol is defined annually in the light of oil prices after deducting preferential oil prices agreed on by the two countries,” Saleh said. “This figure might change and go up to its previous level when oil prices recovered their past year’s level,” he added.—Reuter