The following is an archived copy of a message sent to a Discussion List run by the Campaign Against Sanctions on Iraq.

Views expressed in this archived message are those of the author, not of the Campaign Against Sanctions on Iraq.

[Main archive index/search] [List information] [Campaign Against Sanctions on Iraq Homepage]

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Oil Supplement, 3-10/12/00

OIL SUPPLEMENT, 3-10/12/00

*  Iraq Blames U.S. for Its Halt of Oil Export
*  Iraq Bans Reselling Oil to Enemies
*  Iraq, U.N. discuss compromise on Dec oil prices
*  Iraq crude boycott targets U.S. oil import reliance
*  Iraq oil-for-food deal extended
*  OPEC Oil Output And Iraq
*  France proposes plan to adjust Iraq's oil-for-food program
*  UN extends Iraq oil program, relaxes spending restrictions
*  Iraqis Delay Agreeing to U.N. Deal
*  U.N. and Iraq Agree on Oil Price
*  OPEC oil price falls below $28


BAGHDAD, December 3 (Xinhuanet) -- The halt of Iraq's oil export
was caused by U.S. pressure on the oil overseers of the United
Nations, Iraqi Oil Minister Amir Muhammad Rashid told a press
conference here on Sunday.

The Iraqi minister said that on November 21, four days before
Iraq submitted an oil pricing formula for December to the U.N.
overseers, responsible for giving consultations and advice to the
U.N. Sanctions Committee, the U.S. exerted pressure on them and as
a result, the committee and Iraq failed to agree on the price mechanism.

Consequently, oil companies could not send their tankers to load
Iraq's oil because "they can not predict what the oil prices they
will have to pay," Rashid said.

"The American position, with support from Britain, has resulted
in the interruption of Iraq's oil export to the world market," he said.

Iraq "has absolutely no intention of interruption of its oil
export," Rashid said, adding that Iraq has always aimed at
maintaining the stability of the world oil market.

Answering questions from Xinhua, Rashid said that Iraq will be
able to defend its position on the price mechanism and at the same
time, "we will manage to explain our position more and more in
detail so that the overseers will be convinced." 

Rashid urged the oil overseers to have a better understanding of
Iraq's stand and shrug off the "political pressure" from the U.S.
and Britain. 

Iraq submitted the oil price mechanism from its own vision of
the oil market and based on its normal oil policy, which is aimed
at making its oil competitive in the market and encouraging buyers
to load oil without any reluctance or hindrance, Rashid said.

However, he expressed optimism that the stalemate will end soon
as it has often been the case at the end of each phase of the U.N. oil-for
food program, launched in late 1996 to offset the effects
of a crippling U.N. sanctions on Iraq since its 1990 invasion of Kuwait.


People's Daily, China, December 03, 2000

Iraqi President Saddam Hussein has been authorized to take a harsh action
toward foreign countries or companies which resell Iraq's oil to its
enemies, the official Iraqi News Agency (INA) reported on Saturday, December

The decision was made at a cabinet meeting chaired by the Iraqi president on

In the case, any foreign countries or oil companies, which are proved to
resell Iraq's crude to its enemies, will be put on "a black list" and be
forbidden from acquiring Iraq's oil again or doing business with the UN
sanctions-hit country, the INA said.

Iraq has been under UN sanctions ever since its 1990 invasion of Kuwait.
Under the oil-for food deal in 1996, Iraq is allowed to export 2.4 million
barrels of oil a day in exchange for humanitarian goods.

Iraq's latest move seems to be primarily directed against the United States,
which has been regarded by Iraq as its number one enemy for blocking the
lift of the U.N. sanctions.

A recent report by the US Department of Energy said that American oil
companies, directly or indirectly, bought an average of 725,000 barrels of
Iraqi oil a day last year, accounting for 7.3 percent of the US oil imports.

Iraq's oil has been exported via two main outlets: Ceyhan, Turkey in the
north and Iraq's southern port city of Al-Baker.

Iraq has intensified its anti-sanctions efforts this year and has taken
numerous moves to challenge the UN Sanctions Committee which is dominated by
the US and Britain.

This could be manifested by another decision taken by the cabinet meeting to
upgrade the Saddam International Airport, which was reopened on August 17 in
defiance of the air embargo insisted [on] by the US and Britain.

The international airport has become dilapidated after a closure of 10

December 4, 2000       

UNITED NATIONS, (Reuters) - Iraq and the United Nations are discussing a
possible compromise to the row over December oil prices that have helped
lead to a suspension in oil exports, Iraqi U.N. representative Saeed Hasan
said Monday.

``They are discussing a possible compromise,'' said Hasan about the December
oil prices that the U.N. sanctions committee rejected as too low last week.

Hasan said the discussions are ongoing between Iraq's oil marketing arm
State Oil Marketing Organization (SOMO) and the U.N.'s in-house oil
advisors, the so-called overseers.

Hasan said that the two sides are between five cents and 20 cents per barrel
away from bridging the gap between what SOMO wants and what the overseers
see as fair oil prices.

Iraq stopped oil exports last Friday. Oil industry sources say it is a row
over a surcharge of 50 cents a barrel Iraq wants for its oil industry but
Hasan says that no formal proposal has been made on the surcharge and it
should not be included in the discussions of Iraq's oil pricing.

``These are rumors, this 50-cent surcharge,'' Hasan said. ''Nothing

He said that Baghdad has not officially asked for the surcharge and that it
should not be included in discussions over December oil prices.



New York, Reuters, 5th December: Iraq's decision to impose a crude oil
export boycott on the U.S. comes at a time when America's refiners have
become more dependent on Baghdad's oil than ever before.

U.S. thirst for Iraqi crude has doubled in the past two years to some
750,000 barrels daily (bpd) - nine per cent of total U.S. oil imports - with
No 1 U.S. oil firm Exxon Mobil, the No 2 Chevron and independent refiner
Premcor leading the way.

Other purchasers Iraqi oil for their U.S. refineries include major BP and
other leading independent refiners Koch Petroleum, Valero and Tosco. While
U.S. oil companies do not have official contracts to buy Iraqi oil under the
Opec producer's oil-for-food programme with the UN, they can import quite
legally through oil trading middlemen.

The imports were threatened at the weekend when Iraq said it would boycott
companies and countries that sold its crude oil to countries it regards as
hostile. "Any company found supplying Iraqi crude to a country in a state of
war with Iraq will be put on the blacklist and there will be a partial or
full ban in dealing with it," said Iraqi Trade Minister Mohammed Mehdi

Although the statement did not name countries Baghdad considered hostile, it
was clearly referring mainly to the United States, which led the 1991 Gulf
War against Iraq. At a time when U.S. winter stocks of crude and refined
products are already running low, the threats may scare some companies from
importing crude, according to some buyers of Iraqi crude.

"People are not buying Iraq crude because they are not going to run the risk
of getting into trouble," said one oil trader. Iraq's move highlights the
growing U.S. dependence on imported oil, as robust demand at home pulls away
from declining domestic production.

Baghdad's penetration of the U.S. oil market has now surpassed pre-Gulf War
levels, when exports were averaging around 500,000 bpd, Department of Energy
figures show. In recent months, ExxonMobil has been taking in nearly 200,000
bpd, while Premcor has been importing 130,000 bpd.


News24 (South Africa), 5th December

United Nations - The Security Council met on Monday to discuss proposals to
streamline the UN's ballooning Iraq oil-for-food programme and to use some
of its oil revenues for new purposes.

Diplomats said they doubted that members of the council would agree on all
the proposals before midnight on Tuesday (0500 GMT Wednesday), when the
current 180-day phase of the programme expires.

Contentious points in a 21-point draft resolution included:

§ making some of Iraq's oil revenue available in cash to buy locally
produced food and to pay workers in the dilapidated oil industry;

§ using the revenue to pay the arrears on Iraq's UN dues, currently just
over $11 million;

§ expanding the categories of items for automatic approval in line with the
sanctions committee's "fast-track" procedures.

The director of the programme, Benon Sevan, told the council that Iraq's oil
revenues had increased four and a half times over four years, from $2.15
billion in the first phase to $10.3 billion in the current phase.

Fifty-three percent of that is available for imports to the central and
southern regions of Iraq, which are under government control, and another 13
percent to the three Kurdish provinces in the north, where UN agencies
implement the programme.

Most of the remaining 34 percent goes to a compensation fund for victims of
Iraq's invasion of Kuwait, and a small amount to cover the running costs of
the programme.

Sevan noted that Iraq was now allowed to import a broad range of items in
diverse sectors.
"We cannot go on applying the same procedures that were valid when it was
just food and medicine," he told reporters after briefing the council.

It was time for the committee to review its procedures "to ensure that the
applications are approved more expeditiously so that supplies can arrive in
Iraq on a timely basis," he said.

He added: "It took God seven days to create the world. I don't want to have
to wait two months to review the procedures of the committee."

The draft resolution would add electrical goods and housing supplies to the
committee's fast-track categories, which already include food, medical,
educational, agricultural, basic water and sanitation supplies.

Diplomats said France wanted the procedures to include transport and
telecommunications items too, but the United States disagreed, arguing that
such items might have a military potential and must therefore be vetted.

France also proposed that some of the revenues go towards paying off Iraq's
contributions to the UN.

The French ambassador to the UN, Jean-David Levitte, pointed out that "the
only foreign currency freely available to Iraq today comes from smuggling".

It would be "somewhat paradoxical and even embarrassing for the United
Nations" to accept that money as payment for Iraq's dues, he said.

But diplomats said Britain and the United States would let Iraq's oil money
be used only once it had implemented all council resolutions.

They said that London and Washington were not unhappy to see Iraq deprived
of its right to vote in the UN General Assembly, the penalty for any country
that falls more than two years behind on its dues.

Sevan told the council that unless some revenues were available as a "cash
component" to buy local produce, "we will soon face serious difficulties".

Iraq's allies on the council argued in favour of a cash component for
training and paying maintenance workers in the oil industry, which the UN
says is in danger of collapse.

The draft resolution would make 600 million euros available for the oil
industry, but only as part of a general cash component for all sectors.

Iraq has in the past refused to allow its oil revenues to be handled by UN
relief agencies or non-governmental agencies. - Sapa-AFP


A recent report from the Emirates Industrial Bank (EIB) suggests that GCC
oil revenues will have increased around 84% to $151 billion this year,
compared with $82 billion dollars in 1999.

A recent report from the Emirates Industrial Bank (EIB) suggests that GCC
oil revenues will have increased around 84% to $151 billion this year,
compared with $82 billion dollars in 1999.

Likewise OPEC revenues, excluding Iraq, are expected to increase by around
75% to $280 billion, compared with $160 billion last year. The EIB report
worked out its figures based on average oil prices and production levels. It
added that November OPEC output, excluding Iraq, climbed to 30 million bpd.

Meanwhile, following the withdrawl of Iraqi oil from the world market, local
media reports quote Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah
stating: "Kuwait, Saudi Arabia, and the UAE are capable of covering the drop
in oil markets after Iraq stopped its oil exports..(however) markets
are saturated for the time being and there is no need to boost production to
compensate for Iraq's quota."

Saudi Arabia, OPEC's largest producer, and the UAE are among the few cartel
members who have surplus oil production capacity.


by Jihad Al-Khalil

Paris, Dec. 5 (UPI) -- France submitted a draft plan to the U.N. Security
Council to adjust Iraq's oil-for-food program to allow Baghdad to sell
enough oil to cover humanitarian needs. A French diplomatic source said his
country has a number of ideas "we seek to convince Security Council members
of in order to make adjustments to the oil-for-food program" in such a way
as allowing to "overcome present difficulties that prevent the Iraqi people
from benefiting from this program."

The source explained that France's proposals call for "paving the way for
Iraq to export enough oil so that it could buy medical and industrial
equipment, food and other needed material which means that Iraq will have to
increase its (oil) exports." "Based on this, we adopted Baghdad's request
for allocating 1.5 euro on every barrel of oil to use it for financing
repair and rehabilitation of its oil sector and installations. And in
return, we proposed that the U.N. supervises a fund with revenues restricted
to maintenance and its well usage," he said.

The source said France proposed to implement contracts concluded between
Iraq and a number of companies to buy necessary goods. Such frozen contracts
reached $2.3 billion since last October. "In order to get out of this
dilemma, we propose that the Security Council replaces the U.N. boycott
committee to endorse such contracts which have been frozen without
acceptable reasons," he said.

Meanwhile in Baghdad, Iraqi Foreign Minister Mohammed Saeed al-Sahhaf
criticized France for bowing to pressures and halting recent moves to help
lift the 10-year embargo imposed by the United Nations on Iraq to punish it
for its 1990 invasion of Kuwait. Al-Sahhaf accused France from retracting
its decision to resume regular flights by its Air France national carrier to
Baghdad and "backing out from positive steps in favor of Iraq." --

by Evelyn Leopold
Boston Globe, 7th december

UNITED NATIONS (Reuters) - The UN Security Council has renewed the
humanitarian program for Iraq and agreed to give Baghdad more flexibility on
how it spends oil revenues.

After a day of contentious debate, the 15-member council voted unanimously
late Tuesday to extend the ''oil-for-food'' program for six months. The
program, begun four years ago, must get a new mandate every six months.

The council's resolution adds a provision that asks UN Secretary General
Kofi Annan to make arrangements for Iraq to spend cash on local goods for
civilian needs. It also allows Iraq to use the equivalent of $528 million
over six months for paying oil workers and repairing equipment.

The program allows Baghdad to sell oil, under UN supervision, in order to
buy food, medicine, oil equipment, and a host of other goods in an effort to
ease the impact of UN sanctions on Iraq's 23 million people. The embargoes
were imposed in August 1990 after Iraq invaded Kuwait.

The resolution unanimously adopted by the 15-member council would expedite
the shipment of supplies by adding goods to lists of preapproved items. It
would exempt some electricity and housing supplies from mandatory approval
by the Security Council's Iraqi sanctions committee.

Council members also promised to consider adding transportation and
telecommunications to these lists.

The program has generated $37 billion in revenue since its inception in
December 1996. Some $24 billion of this amount has gone to humanitarian
programs. Currently, contracts valued at $2.5 billion have been blocked,
mainly by the United States, and $4.7 billion is available to purchase

The debate over changes in the program usually pits the United States and
Britain, which argue against loosening restrictions in the plan, against
France, Russia, and China, which are willing to offer Iraq more incentives.

''We continue to believe the oil-for-food program is meeting the needs of
the Iraqi people while denying the Baghdad regime access to funds it would
use to further threaten its neighbors,'' US envoy James Cunningham told the

But Chinese delegate Chen Xu said the program ''will never completely
address the humanitarian suffering of the Iraqi people and only an early
lifting of the sanctions can achieve this objective.''

France had wanted Iraq to use some of its oil revenues to pay the $15
million it owes in UN dues. But the United States and Britain refused and
the resolution puts off consideration of the measure.

Deleted from the original text was a request for a report on ''all forms of
smuggling'' of oil by Iraq and the ''potential for manipulation of oil
contracts,'' a US-British idea opposed by Russia and China.

Iraq last week stopped all oil shipments and diplomats said Baghdad would
not try to rescind the move until the resolution was adopted. Iraq's
reaction to provisions in the text was not immediately clear.

At the same time Iraq and UN oil experts were trying to reach agreement on a
pricing formula for December that would enable Baghdad to resume oil
shipments. Iraq halted its crude exports of 2.3 million barrels a day after
the United Nations said its proposed December prices were too low. 

Las vegas Sun, 6th December, 2000

BAGHDAD, Iraq (AP) -- The Iraqi leadership postponed a decision Wednesday
whether to accept the United Nations' latest extension of the oil-for-food
program, the official Iraqi News Agency reported.

The meeting, headed by President Saddam Hussein, came a day after the U.N.
Security Council renewed the program and unanimously approved a major
increase in humanitarian aid for ordinary Iraqis trying to cope with a
decade of U.N. sanctions.

"It was agreed to further discuss the (issue)," said a statement released
after the meeting of members from the country's two highest bodies, the
Revolutionary Command Council and the Iraq Regional Command of the ruling
Baath Party.

The statement, carried by the news agency, did not say how long the
leadership will take to decide on the issue.

Under the program, Iraq is allowed to sell oil provided that the revenues
are spent on food, medicine and other humanitarian supplies as well as
equipment needed to maintain its petroleum infrastructure. The sanctions
were imposed after Iraq's 1990 invasion of Kuwait.

In Cairo, Egypt, Iraq's Trade Minister Mohammed Mehdi Saleh told The
Associated Press Wednesday that the oil-for-food program has been "a total

"Renewing the (oil-for-food) memorandum is not the Iraqi demand. Iraq's
demand is for the lifting of the embargo since Iraq has fulfilled all its
commitments," Saleh at a meeting of Arab trade ministers in Cairo.

The oil-for-food program has generated $37 billion in revenue since 1996,
and $24 billion has gone to humanitarian programs, the program's executive
director Benon Sevan told the Security Council on Monday. The program has
spent $793 million on administrative and operational costs, he said.

Currently, contracts valued at $2.5 billion have been placed on hold, and
there is $4.7 billion available to purchase supplies, Sevan said.

However, Saleh said that Iraq has received only $8.8 billion in revenue and
that contracts for $18 billion worth of oil were on hold.



UNITED NATIONS (Associated Press, Fri 8 Dec 2000) ‹ U.N. experts agreed
Thursday to a proposal by Baghdad for the price of its oil, ending a
weeklong dispute and opening the way for the resumption of Iraqi oil

The experts said the Iraqi proposal reflected market value and recommended
that the U.N. committee monitoring sanctions imposed after Iraq's 1990
invasion of Kuwait approve the price formula.

The committee, which has said it would follow the experts' recommendation,
has until Friday afternoon to approve the prices for December exports. The
new price formula was not announced.

Iraq halted its 2.2 million barrels a day of oil exports a week ago after
the committee rejected its initial proposal as too low.

Diplomats and industry analysts saw the low price as an attempt by Baghdad
to compensate buyers for a reported 50-cent a barrel surcharge it asked
foreign oil buyers to deposit in an Iraq-controlled account. The foreign
companies ‹ which reportedly received faxed demands from Iraq's state oil
marketing company ‹ refused to pay because it would violate U.N. sanctions.
Iraq later denied it ever asked for a surcharge.


According to the U.N. Office of the Iraq Program, Iraq lost more than $500
million in revenues in the seven days its exports were suspended.

``Taking into consideration that prices have fallen since Iraq's first
submission, and also the fact that buyers have lost confidence in Iraq as a
reliable source of supply, the overseers would recommend'' that the prices
be approved, a U.N. official said.

Irish Times (AFP), 6th December

The basket oil price used by the Organisation of Petroleum Exporting
Countries (OPEC) to help determine its production policy fell below $28
today for the first time for four months, the organisation said.

The price, based on an average of seven crudes, stood at $26.58, according
to the OPEC secretariat in Vienna.

The 11-member grouping has increased production four times in the last year
in a bid to ease crude prices which soared to 10-year highs above $35 in
recent months.

The price of oil has sunk to four-month lows in recent days amid confidence
notably that Iraq could soon resume exports, leaving the market with copious
supplies of crude.

Under a price-band mechanism agreed in March, OPEC undertook to increase
production by 500,000 barrels per day if the basket price remained above $28
for 20 consecutive days.

The mechanism was triggered in October, but OPEC ministers also decided at
least once not to trigger the mechanism although the conditions for its
implementation had been fulfilled.

The OPEC basket price has remained almost constantly above $28 since May,
apart from one dip in early August, according to OPEC figures.

The next OPEC ministerial meeting is scheduled for January 17th in Vienna.

This is a discussion list run by the Campaign Against Sanctions on Iraq
For removal from list, email
Full details of CASI's various lists can be found on the CASI website:

[Campaign Against Sanctions on Iraq Homepage]