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An oily deal

Just for interest, this article spells out why lifting the "oil embargo"
will not make any great quantitative difference to oil production and
export in Iraq - i.e. that Iraq's efforts to reach the $5.2 billion/six
months ceiling have been scuppered by the combined effects of sanctions
and the state of the world's oil markets.  

I think it's good that the press should emphasise that the Sanctions
Committee will be crucial in determining at what point industry and
services will be able to be rebuilt. If the current ceiling really is
"removed" from the legislation, then will more campaign attention focus
on the Sanctions Committee itself? It will be important to keep the
spotlight on whether their activities are facilitating or impeding the
restoration of the health (and other social) infrastructure of the


BAGHDAD, Iraq (January 12, 1999 11:11 a.m. EST - As oil-producing countries try to trim
excess production, Iraq on Tuesday announced plans to raise its output.
Iraq hopes to boost production to 3 million barrels per day from the
current 2.5 million barrels, and to 3.5 million barrels within two
years. Faleh al-Khayat, the Oil Ministry's director-general of planning,
said the increase was contingent upon receiving spare parts for the
country's ailing oil industry, battered by more than eight years of U.N.
trade sanctions. Iraq has complained of the slow delivery of spare parts
under the U.N.-approved oil-for-food program, which is an exception from
the sanctions. Special chemicals for treating crude oil already have
started arriving in Iraq. The news helped push oil prices lower this
morning on the New York Mercantile Exchange. Contracts for future
delivery of crude oil fell 28 cents to $13.16 a barrel. Iraq's oil
exports were banned in August 1990 as part of U.N. trade sanctions
imposed to punish Iraq for invading Kuwait. If sanctions are removed,
Iraq can implement contracts it has signed with foreign firms, including
Russian and Chinese, to add another 2.5 million barrels per day to its
production, al-Khayat said. In December 1996, the United Nations
implemented the oil-for-food program, which allows Iraq to export up to
$5.2 billion worth of oil every six months to buy food and other
humanitarian goods. Al-Khayat said even with the increased output Iraq
cannot hope to earn $5.2 billion in six months because of weak world oil
prices. Iraq's oil reserves are the world's second largest after Saudi
Arabia. Its quota set by Organization of Petroleum Exporting Countries
before the invasion of Kuwait was a little more than 3 million barrels a


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