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* Funding shortfall for Iraq humanitarian programme forces cuts (Agence France-Presse) * OPEC poised to cut output in order to lift oil prices (NY Times) * Blast on Sunday stops oil flow in Iraq-Turkey pipeline (Nando Times) * Iraq says oil flow back (Associated Press) The NY Times writes: "Iraqi oil production is also stabilizing. In 1998 Iraq more than doubled its oil production to 2.5 million barrels a day as the United Nations allowed it to sell more oil under its oil-for-food sanctions regime. That ceiling cannot increase much more now unless the United Nations sanctions are removed altogether -- something the United States would not allow." (NY Times). ******************** Funding shortfall for Iraq humanitarian programme forces cuts 00:02 GMT, 19 March 1999 UNITED NATIONS, March 18 (AFP) -A funding shortfall in a humanitarian programme financed by Iraqi oil exports is forcing cutbacks on several fronts including the telecommunications sector, a UN statement said Thursday. The statement issued by the oil-for-food programme for Iraq summarized a letter from the programme's executive director, Benon Sevan, to the UN Security Council. Sevan detailed severe cuts already implemented in the water and sanitation sector during the programme's last six-month phase which ran until last November. He said that an allocation of 174.5 million dollars to improve Iraqi water and sanitation had been slashed to 35.3 million. ******************** OPEC Is Poised to Cut Output, Lift Oil Prices NY Times, 23 March 1999 By YOUSSEF M. IBRAHIM VIENNA, Austria -- As they slipped out of their black limousines into luxury hotels dotting the contours of Vienna's graceful Stadtpark Sunday night, officials of OPEC, the nearly moribund oil cartel, were stirring with new life, ready to jolt oil prices back up. If all goes well at an emergency meeting set for Tuesday here, the Organization of Petroleum Exporting Countries, in partnership with major oil producers like Mexico and Norway who are not members of the group, will take more than 2 million barrels of oil a day out of world markets, starting in April. It would mark the first time in 13 years that the cartel has taken such a drastic measure, largely because of the pressing needs of the largest producer, Saudi Arabia, and other producing countries to generate more revenue, experts say. Anticipation of the move -- which has emerged as OPEC officials formulated it in secret and in public talks held in Riyadh, The Hague, Dubai, London and other cities in the last four weeks -- has already pushed prices up 20 percent, bringing the American benchmark brand known as West Texas Intermediate to $15 a barrel. This has halted, for a while at least, the steady fall in prices that devastated the world energy industry in the last year. Part of the impact reflects optimism in the oil industry that salvation is on the way. In the last decade, globalization, competition from new oil suppliers and disputes within OPEC combined to send oil prices into a seemingly endless tumble to a point where gasoline and fuel prices today are, in inflation-adjusted prices, the lowest since the end of the World War II. Now, a confluence of new circumstances may help the cartel reverse some of these trends. Among other things, the Asian economic crisis, which erased more than 1.5 million barrels a day in demand for oil, is stabilizing. Iraqi oil production is also stabilizing. In 1998 Iraq more than doubled its oil production to 2.5 million barrels a day as the United Nations allowed it to sell more oil under its oil-for-food sanctions regime. That ceiling cannot increase much more now unless the United Nations sanctions are removed altogether -- something the United States would not allow. Above all, the pain of lower prices has piled mountains of debt onto the economies of many oil-producing countries, cut their government budgets down to a point of endangering social and political cohesion, and ravaged oil company profits worldwide -- enough to create a consensus for OPEC discipline and worldwide cooperation. "The worst seems to be over," said Robert Mabro, director of the Oxford University Institute for Energy Studies in England. "They have to act because low prices are deeply hurting producing countries and oil companies. Hard currency revenues are shrinking dangerously in places like Nigeria, Venezuela, Russia, Mexico. Multinational oil companies have cut costs to the bone, laid off thousands of people and seen their profits evaporate. Everybody wants a solution," Underlying the seriousness of the action, Saudi Arabia, the world's largest oil producer and most important OPEC member, has agreed to take the biggest cut, shutting down half a million barrels of oil a day of its production starting in April. "As far as we are concerned, it's a done deal," said a senior Saudi official in Riyadh, who asked not to be identified. "We are informing customers right now that deliveries will be cut." Iran, Kuwait, Venezuela, Algeria, Libya, Indonesia, the United Arab Emirates, Qatar and Indonesia are joining in with cuts that total about 1.5 million barrels a day. Norway and Mexico, major oil producers and allies of the United States who are not members of OPEC, intend to cut their production by a combined 350,000 barrels daily. This is a remarkable show of solidarity unseen since 1986, when a similar collapse in prices led producers to drastic and coordinated production cuts. While still frowning on any concerted action to control prices of such a vital commodity, the United States appears not to object to stronger oil prices, which would also help the American oil industry. It too has been deeply hurt by the price collapse, resulting in the loss of thousands of jobs. "We feel that lower oil prices are good for consumers, but we recognize they can have a negative impact domestically and on some of our friends like Venezuela and Mexico," Energy Secretary Bill Richardson said in a telephone conversation from Washington on Friday. "So far, OPEC's response has been responsible and restrained." It is Saudi Arabia, the cartel's undisputed master and America's staunch Persian Gulf ally, that holds the fate of the accord in hand. As owner of the world's largest petroleum reserve, Saudi Arabia had two ways to go. "They could go back, as they have done now, revert to their old standard of constraining production and hope that prices will go up," said Anthony Miles, senior vice president at the San Francisco office of the Boston Consulting Group. "Or they can swing all the way, pumping as much oil as possible, and the guys with the most oil will win." It will take some months to determine whether OPEC's new discipline will hold. The big deterrent to cheating is Saudi Arabia's unique ability to flood the market. With prolific oil fields, Miles and other experts point out, the desert kingdom can pump more than 10 million barrels a day at minimal extraction costs of $1 a barrel. This flooding would bring prices down to as low as $5 a barrel in a few months. Few oil-producing countries can take this possibility lightly. In the long run, it would put many producers out of business in the United States, the Caspian Sea, Russia and the prolific North Sea shared by Norway and Britain, where production costs range from $5 to $10 a barrel. The Saudis' need to produce higher revenues has become compelling. Piling one budget deficit over another in the last decade, Saudi Arabia has accumulated a debt of $130 billion, the equivalent of its entire annual economic output. As a result, after tenaciously clinging to a level of production set since 1990 at 8 million barrels a day, Saudi Arabia for the first time has offered to lower it to 7.5 million barrels a day. This is a fundamental change in policy. "The eight-million level was practically untouchable -- it had become an icon-hobbling policy," said Amy Myers Jaffe, a senior oil analyst at the Baker Institute at Rice University in Houston. "The willingness to abandon it shows the urgency they attach to higher revenues now." ******************** Blast stops oil flow in Iraq-Turkey pipeline Copyright © 1999 Nando Media Copyright © 1999 Associated Press ANKARA, Turkey (March 21, 1999 3:20 p.m. EST http://www.nandotimes.com) - An explosion damaged part of the oil pipeline linking Iraq to Turkey on Sunday, cutting the oil flow, a pipeline official said. The cause of the blast was unknown, said the official, speaking on customary condition of anonymity from the site of the explosion in Midyat in the southeastern province of Mardin. The blast caused a fire that was still burning, although firefighters had stopped it from spreading, Mardin Gov. Fikret Guven said. It was not clear when the flow of oil could resume, said Guven. The damage seemed minor, but its extent would be assessed Monday, he added. About half the oil Iraq exports flows through the pipeline, some 1 million barrels a day. Guven said authorities were not ruling out the possibility of sabotage. Oil transport between Iraq and Turkey resumed earlier this month after U.S. warplanes attacked the Iraqi communications centers that controlled the flow of the pipeline's oil. Iraq has been barred from exporting oil freely since U.N. sanctions were imposed in 1990 to punish Iraq for invading Kuwait. Under a U.N. oil-for-food program, Iraq can sell $5.2 billion worth of oil over six months to buy food, medicine and other humanitarian goods. ******************** Iraq Says Oil Flow to Turkey Back By Leon Barkho, Associated Press Writer, Monday, March 22, 1999; 4:44 p.m. EST BAGHDAD, Iraq (AP) -- Iraq resumed pumping oil through a pipeline via Turkey on Monday, a day after an explosion damaged the oil line in southeastern Turkey, an Oil Ministry official said. Turkish authorities have not ruled out sabotage as the cause of Sunday's explosion at Midyat in the southeastern Turkish province of Mardin, which halted the flow of oil. Kurdish rebels fighting for autonomy in southeastern Turkey have targeted the pipeline in the past. The Iraqi official, speaking on customary condition of anonymity, said pumping resumed at a normal rate Monday night. About half the oil Iraq exports flows through the pipeline, a total of about a million barrels a day. The rest goes via ships from Iraq's southern Bakr port. In New York, John Mills, spokesman for the oil-for-food program, said pumping resumed after Turkey diverted the oil from the damaged pipeline to a smaller one, with a 40-inch diameter. He said repairs on the larger line are under way. The pipeline was briefly put out of commission earlier this month when U.S. jets patrolling a ``no-fly'' zone over northern Iraq hit a communications center that controlled the flow of the pipeline's oil. ******************** -- ----------------------------------------------------------------------------- This is a discussion list run by Campaign Against Sanctions on Iraq. To be removed/added, email email@example.com, NOT the whole list. Archived at http://linux.clare.cam.ac.uk/~saw27/casi/discuss.html