Iraq extends oil supply deal with Jordan

AMMAN (Reuters) - Iraq extended for another three years an unimplemented accord with Jordan to supply it with 10,000 barrels per day of crude oil under preferential terms, officials said on Friday.

They said the two sides however failed during a state visit by Iraqi Prime Minister Nuri al-Maliki to Amman to reach agreement on a new deal that would have enhanced the terms of the original accord that was due to expire in August.

The deal signed in 2006 was the first official arrangement since the end of cheap Iraqi energy supplies Jordan had relied on before the U.S. invasion of Iraq in 2003.

The amount covers 10 percent of Jordan's energy needs of around 100,000 bpd. But it was never put in force due to insecurity on the highway to Jordan that made it difficult for supplies being trucked to reach the 10,000 bpd quantity agreed.

Later mutual suspicions that had marred the two neighbors' political ties hampered any progress to enforce the deal even after security improved, industry executives said.

Officials said both sides failed to arrive at a discount formula that offers the crude at below market prices within the context of a broader agreement on other contentious bilateral issues such as old governmental debts. No other details emerged.

The energy dependent kingdom now buys its oil from the international market after Saudi Arabia ended a 50,000 bpd oil grant to compensate for the loss of Iraqi oil.

Jordan's negotiations with Kuwait and Saudi Arabia to get discounted prices for its energy imports have yet to bear fruit. Record oil prices have worsened its chronic budget deficit.

(Writing by Suleiman al-Khalidi; Editing by James Jukwey)

((Reuters Messaging; suleiman.al-khalidi.reuters.com@reuters.net; Amman Newsroom +9626 4623776)