Palestinians hope to import Iraqi oil, become more energy independent

Palestinians are inching closer to the possibility of being able to import Iraqi oil to Jordan and have the Jordan refinery convert it to local products that can pass Israeli inspection.

al-monitor Flames emerge from flare stacks at Nahr Bin Umar oil field, north of Basra, Iraq, Sept. 16, 2019.  Photo by REUTERS/Essam Al-Sudani.
Daoud Kuttab

Daoud Kuttab


Topics covered

Oil and gas

Sep 30, 2019

When Iraqi officials offered to sell Palestinians oil at reduced prices, few believed that this offer would actually become reality. While many obstacles continue to exist, the possibility of making this goal a reality is inching closer.

The new Iraqi government, whose Prime Minister Adel Abdul Mahdi spent time in south Lebanon in the 1980s and was very close to the PLO leadership, had invited earlier this year senior Palestinian officials to Iraq. Nabil Shaath, a senior adviser to Palestinian President Mahmoud Abbas, delivered June 23 a letter from Abbas to his Iraqi counterpart. This was followed by Palestinian Prime Minister Mohammad Shtayyeh’s visit to Baghdad July 15. Shtayyeh was accompanied by a large delegation for serious discussions with their Iraqi counterparts.

After returning, a delegation of the General Petroleum Commission was dispatched to Jordan July 11 to inquire whether the Jordanian refinery in Zarqa is able to convert the purchased Iraqi oil to products that would be acceptable by the Israeli standards commission. The visit was aimed at testing the waters to see if the Iraqi oil can be converted to acceptable international standards before beginning any purchase of oil.

Israeli gasoline and diesel use international standards, which are much higher than those in Jordan and what the Jordanian refinery is normally producing.

A senior Palestinian official confirmed to Al-Monitor the press reports about the request submitted to Israel to allow the import of oil products via Jordan.

Zafer Melhem, head of the Palestinian Energy Authority, told various media outlets that Israelis were surprised in August when an official request by the General Petroleum Commission was made to their Israeli counterparts to import the products from Jordan. Melhem told the London-based Al-Araby Al-Jadeed Sept. 21 that the request had been made by the Palestinian Petroleum Commission a month earlier. “We requested to import the petrol from Jordan without specifying where the original oil is coming from,” he said.

The 1994 Paris Protocol signed between Israel and the Palestinians following the Oslo Accord allows Palestinians to diversify their gasoline imports, on the condition that it is not sold at less than 15% of the Israeli prices and that it conforms with Israeli standards. The Paris Protocol stipulates in Article III (13), “The Palestinian side has the right to use all points of exit and entry in Israel,” without taking into account Israel's refusal.

The protocol further states, “Jordanian standards, as specified in the attached Appendix I, will be acceptable in importing petroleum products into the Areas, once they meet the average of the standards existing in the European Union countries, or the USA standards.”

Haidar Zaban, former head of the Jordan Standards and Metrology Organization, told Al-Monitor that at present, Jordanian standards are much more inferior than European and US standards. “The diesel we produce has 350 sulfur, while European standards has zero sulfur. Our regular gasoline is 90 octane and our premium gasoline is 95 octane. The refinery doesn’t produce 98 octane.”

Israeli gasoline is 95 octane for regular and 98 octane for premium, while diesel is Europe 3 with zero sulfur.

The senior Palestinian source who spoke to Al-Monitor conceded that it will be costly having the Jordanian refinery produce the higher quality petrol products. “For us, we need to diversify our sources and end our dependence on Israel,” he noted.

One of the major gains of importing gasoline from Jordan will be the fact that the Palestinian government will be circumventing Israel, which is currently conditioning giving Palestinian remittances on deducting what Palestinians pay to families of prisoners and martyrs. “By receiving the oil directly via Jordan and paying them directly, we will be in control of our monies and will no longer have to depend on Israel and be subject to their blackmail decisions regarding the dispersal of our own monies,” the source added.

The Palestinian government pays Israel annually $1.2 billion for energy costs, which include the electricity bill and petrol products. 

The Israeli decision in April to return Palestinian tax remittances minus a certain amount has triggered an important and long-needed policy change by the Palestinian government. Total dependence on Israel for many issues, including the all-important energy products, have handicapped Palestinians and made them fully dependent on Israel. By going to fellow Arab countries for oil and working out the standards problems with a refinery in Jordan, the Palestinian leadership takes an important step toward freeing itself from the shackles of the occupiers and dependency on them for basic issues. The move for ending dependence on Israel for energy products follows an earlier decision to stop transferring patients to Israeli hospitals. The process of delinking from Israel and its half-century occupation is a long and tortuous one, but these efforts for economic independence will go a long way in preparing Palestinians for political independence.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings