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[casi] News, 6-12/4/02 (1)

News, 6-12/4/02 (1)


*  Iraq Announces Cut in Oil Exports
*  Saudi Arabia Moves to Calm Fears of Oil
*  Iraqi Cutoff, Venezuelan Labor Problems Send
Oil Prices Surging
*  Russia Holds Oil Exports Steady
*  SA undecided on oil embargo
*  Lawmaker proposes banning all US imports of
Iraqi oil
*  Iraq's oil cutoff will hurt poor nations first
*  Saddam oil threat justifies drilling in
Alaska, says Bush
*  Jordan and the Iraqi oil
*  IRAQ DIARY, Part 6: Oil and troubled waters
[Pepe Escobar on the atmosphere in the Shi'ite
oil territory around Basra.]
*  Oil slumps as Chavez ousted [This very sad
piece of news is so clearly advantageous to the
US that it is difficult to resist the assumption
that they are behind it. Strike by a privileged
section of the workforce followed by military
takeover in Southern America. Sound familiar?]
*  Imvune boss was named in UN probe into Iraqi
oil deals
*  Oil Companies Lose Faith in Iraq Contracts [It
begins to dawn on the Russian oil companies that
the US will never lift the sanctions until a
situation occurs in which US companies can
compete for Iraqi contracts, and so the deals the
Russians have made with Iraq are worthless.
Unless of course they summon up the courage to
break the sanctions, as they should have done a
long time ago.]


*  Iraq Announces Cut in Oil Exports
The Associated Press, 8th April

BAGHDAD, Iraq: Saddam Hussein said Monday he was
cutting Iraq oil exports for 30 days or until
Israel withdraws from Palestinian territories, an
announcement that triggered an immediate increase
in world oil prices.

Oil Minister Amer Mohammed Rashid said the cutoff
took place as Saddam spoke to the nation at about
2 p.m. local time, or 7 a.m. EDT. Gulsum Korkmaz,
spokeswoman for the Turkish state-run pipeline
company BOTAS, confirmed that Iraq had stopped

Analysts have said such a boycott, which Saddam
had earlier threatened, would not affect world
oil supplies because other major members of the
Organization of the Petroleum Exporting Countries
have not agreed to join Iraq's call and other
producers likely would make up the difference.

The United States and Europe are the major buyers
of Iraqi oil. Iraq produces more than 2.7 million
barrels of crude oil daily, according to the OPEC
Web site.

In London, May contracts of North Sea Brent crude
shot up on news of Iraq's embargo by $1.44 to
$27.43 a barrel on the International Petroleum
Exchange. They settled back somewhat to $26.98,
up 99 cents from Friday's close.

On the New York Mercantile Exchange, contracts of
light, sweet crude for May delivery jumped to
$27.20 before easing back to $26.88 a barrel, up
67 cents from Friday.

Saddam said Iraq's top leaders met earlier Monday
and decided ``in the name of the people of
Iraq ... to stop exporting oil totally as of this
afternoon through the pipelines flowing to the
Turkish ports and the south for 30 days'' unless
Israel withdraws earlier.

He said that if Israel had not withdrawn within
that 30 days, Iraq would consider what action to

Iraq first called on Arabs to cut oil supplies
last week as a way of pressuring the United
States to force Israel to end its military
incursions into Palestinian territory.

``The oppressive Zionist and American enemy has
belittled the capabilities of the (Arab)
nation,'' Saddam said Monday.

He said the Israeli move into Palestinian
territory, which included placing Palestinian
leader Yasser Arafat under virtual house arrest,
was intended ``to break the Arab and Palestinians
will and force them to surrender with humiliation
to the Zionist-American alliance.''

Saddam has portrayed himself as a champion of the
Palestinian cause, a tactic that has helped him
break the isolation imposed after Iraq's 1990
invasion of Kuwait and the ensuing Gulf War.

President Bush has failed to win Arab support for
another attack on Iraq, which he accuses of
supporting terrorists and stockpiling weapons of
mass destruction.

Saddam's unilateral oil cutoff could pressure
other Arab leaders to take similar measures.

Iranian supreme leader Ayatollah Ali Khamenei
said Friday that Islamic countries should stop
supplying oil for one month to countries with
close relations with Israel.

Libya announced Monday that it supported the
call, in a report on its state news agency, JANA.

The first hints from Iraq last week of a possible
boycott caused a brief increase in world crude

``The Iraqi decision will certainly have an
immediate impact on the prices given the volatile
situation in the Middle East and recent oil
disruption in Venezuela,'' said Walid Khadouri,
editor in chief of the Middle East Economic

``But it is not expected to impact the supplies
in the world market.''

Iraq, Iran and Libya all belong to OPEC, which
pumps about a third of the world's crude.

Hans Redeker, a strategist with BNP Paribas, told
Dow Jones Newswires that OPEC and other oil
producers, such as Russia, likely would increase
output to compensate for Iraq's cutoff.

Ali Rodriguez, OPEC secretary general, told Dow
Jones on Monday he would consult all OPEC oil
ministers concerning Iraq's announcement.

Last week, he told Dow Jones an oil embargo would
run counter to the organization's goal of
promoting secure oil supply and stable prices.

A boycott would be ineffective without Saudi
Arabia and Kuwait, who have rejected Iraq's call
to use oil as a weapon. Many Gulf states depend
on oil revenues for more than two-thirds of
government income and cannot afford to stop

The last time oil-producing Arab nations used oil
as a political weapon was in 1973, when reduced
exports caused a global energy crisis. Since
then, the world's wealthiest nations have created
the International Energy Agency to provide a
cushion against any similar disruption.

Based in Paris, the IEA can tap into 4 billion
barrels of strategic oil reserves maintained by
its member countries. That's equal to more than
five years of Iraqi production, based on the
IEA's estimate of Iraq's output in January.

In November 2000, Saudi Arabia led the adoption
of a pledge by OPEC and other major exporters
that oil would not be used as a political weapon.

Iraq's trade with the outside world is restricted
by U.N. sanctions imposed after its 1990 invasion
of Kuwait. However, Iraq is allowed by the United
Nations to sell unlimited amounts of oil to buy
food, medicine and other humanitarian supplies,
and to pay war reparations.

Analyst Khadouri said Iraq had earned enough
under the oil-for-food program to ride out a
month without sales.

*  Saudi Arabia Moves to Calm Fears of Oil
by Ghaida Ghantous
Washington Post (from Reuters), 9th April

DUBAI, April 9—Saudi Arabia moved on Tuesday to
calm fears of a global oil crisis, assuring
markets rattled by Iraq's suspension of exports
that it will guarantee world crude supplies.

Oil minister Ali al-Naimi was quoted in Saudi
newspapers saying that Saudi, the world's biggest
oil exporter, would ensure reliable deliveries.

"I believe there is no threat to the reliability
of worldwide oil supplies, and the reliability of
Saudi Arabian supplies in particular," the Saudi
papers quoted Naimi saying.

Oil prices climbed a dollar a barrel on Monday
after Iraqi President Saddam Hussein announced
Baghdad was suspending exports for a month in
protest at Israel's incursion into Palestinian
areas of the West Bank.

Naimi's comments helped cool prices on Tuesday
with Brent blend crude in late-morning London
trade off 37 cents at $26.65 a barrel.

OPEC has decided that for the time being there is
no need to release extra volumes. Saudi Arabia
and other producers have plenty of spare capacity
to hand in prevent any shortage.

Asked what action Riyadh would take in light of
the calls from Iraq to join its embargo, the
Saudi-owned Asharq al-Awsat newspaper quoted
Naimi saying:

"The kingdom's position regarding the reliability
of supplies has been announced on more than one
occasion and I do not believe that anything could
threaten reliability of supplies on the global

"Whatever may be said, we have proven in many
previous crises that Saudi Arabia and OPEC are
reliable and stable sources of oil supplies,"
another paper, Saudi Gazette, quoted him saying.

Iraqi Oil Minister Amir Muhammad al-Rasheed told
Reuters on Monday that Baghdad had asked fellow
OPEC member countries to join its campaign, or at
least not to raise production.

Iran and Libya have given their support to a ban
but conditional on a blanket embargo by all
Muslim producers, a policy ruled out by Saudi

OPEC Secretary-General Ali Rodriguez said he had
spoken to cartel oil ministers and they saw no
immediate need to raise supplies. Ministers will
keep a close watch on the market.

And the West's energy watchdog, the International
Energy Agency, said there was no need for panic.

"It's regrettable but not a huge volume," said
IEA Executive Director Robert Priddle of the
Iraqi outage. "The market has not reacted sharply
to this."

In the event of an emergency, the IEA can order a
release of reserves from stockpiles held among
its industrialised 25 member countries.

The European Union said on Tuesday its oil
experts will meet to consider the market impact
but there appears little prospect at this point
of any need to release stocks.

Nevertheless, the rise in oil prices is raising
concern among some economic policy makers that
inflated energy costs could stifle the infant
global recovery.

The Asian Development Bank said in an annual
review that high oil prices were the main risk
for the region's growth rate.

German Finance Minister Hans Eichel said Germany
and the United States recognised that oil prices
represented a threat to economic growth.

"We are both convinced that we must do everything
possible to avoid a situation in which the oil
price dampens economic growth," Eichel told
reporters after a meeting in Berlin with U.S.
Treasury Secretary Paul O'Neill.

Iraq's stoppage comes as Baghdad seeks to rally
support in the Arab world against a military
strike by the United States, which sees Baghdad
as a threat to international security.

By supporting the Palestinian cause, Iraq makes
it difficult for Arab countries to join any
alliance against Saddam.

On the one hand Saudi Arabia will not want to
anger Arab public opinion by quickly filling the
gap in Iraqi supplies, dulling the impact of
Saddam's move, but above all Riyadh needs to
underline its status as a reliable source of oil
to the West.

"Iraq has put up a picket line and any oil
producers in the Arab world seen crossing it
would be scab labour," said a trader at a major
oil company in London.

Iraq's oil minister Rasheed said the halt on
nearly two million barrels a day of exports was
designed to cause discomfort for Israel's ally
the United States, buyer in recent months of more
than half Iraq's output.

Baghdad's crude accounts for about four percent
of international oil trade, providing about 10
percent of OPEC's 25 million barrels daily.

Other OPEC producers can easily cover the Iraqi
outage if prices start to run out of control.
Saudi Arabia can deliver its maximum output
capacity of 10.5 million barrels a day to the
market in 90 days. Riyadh, now pumping at about
7.4 million barrels daily, holds the lion's share
of OPEC's five million bpd of spare capacity.
407944e cf

*  Iraqi Cutoff, Venezuelan Labor Problems Send
Oil Prices Surging
Hoover's (Financial Times), 9th April


The Iraqi move was compounded by a sharp drop in
Venezuelan oil exports Monday, due to an
escalating dispute at the national oil company,
Petroleos de Venezuela.

Iraq and Venezuela jointly export about 4.5
million barrels a day, or about 6 percent of
global supplies.

There were other troubling announcements, too.

Friday, Iranian supreme leader Ayatollah Ali
Khamenei urged Islamic countries to stop shipping
oil for one month to countries having close
relations with Israel. Libya announced Monday
that it supported the call. Both nations also are
members of OPEC, the Organization of the
Petroleum Exporting Countries.

However, Iran and Libya are unlikely to join with
Iraq, argued Jan Stuart, head of research for
global energy futures at ABN Amro in New York.

Iran's economy is too weak to go for long without
precious oil revenues, and Libya is worried about
jeopardizing its slowly warming ties with the
United States, Israel's main backer, Stuart said.

"The OPEC nations are making real good money
right now, so I'm not sure they want to cause a
lot of problems," Van De Pol agreed.

Also, he said, Saudi Arabia, Russia and other
major producers could step up their oil flows to
offset any losses.

"Right now, they don't want to rock the boat on
oil," Van De Pol said of the Saudis in

California State Automobile Association officials
said any drop in Venezuelan crude production
should be short-lived because of that's nation's
dependence on oil revenues.

"It's in their best interest not to have
production cuts," CSAA spokesman Atle Erlingsson

And while gasoline prices have risen in recent
weeks, they still remain lower than they were a
year ago, he reported.

As measured Friday, the average price in San
Joaquin County for regular, unleaded self-serve
gasoline was $1.64 a gallon, up from $1.39 a
month ago, but well-below the $1.82 recorded last

Statewide, the average per-gallon price Friday
was $1.66, up from $1.40 a month ago, and less
than the year-ago price of $1.79, Erlingsson

Planting, of the American Petroleum Institute,
noted that President Bush, in a pinch, could
order the release of oil from the nation's
Strategic Petroleum Reserve.

The reserve holds 560 million barrels of crude
oil. It could offset the loss of Iraqi oil
imports for two years, given the current rate of
about 750,000 barrels per day, Planting

The Associated Press contributed to this report.

*  Russia Holds Oil Exports Steady
The Associated Press, 9th April

MOSCOW (AP) — Russia has no immediate intention
to boost oil exports because of Iraq's halt in
crude exports, but will decide in mid-May whether
to do so, a senior Cabinet official said Tuesday.

Russia's aggressive young oil companies want to
drop voluntary export restrictions that were
agreed upon under OPEC pressure to stabilize
world prices, because prices for exported oil
significantly exceed Russian domestic prices.

World prices jumped higher Monday after Iraq's
move, which was aimed at showing support for the
Palestinians in their conflict with Israel. But
Deputy Prime Minister Viktor Khristenko warned
that the price hike could be short-lived.

``The prices are currently high, but factors that
determine them can hardly be called stable and
long-term,'' Khristenko said, according to the
ITAR-Tass and Interfax news agencies. ``It is
erroneous and premature to draw instant

Khristenko said Russia would stick to its earlier
approved exports regime for the second quarter
while closely following the market situation. In
mid-May, the Cabinet ``will sum up the
intermediate results of monitoring and come up
with possible additional decisions on that
basis,'' Khristenko said on a trip to Kazakhstan.

The Russian Foreign Ministry issued a statement
Tuesday saying that ``Moscow is pondering
possible consequences of the Iraqi leadership's
decision to suspend oil exports for one month,''
and expressing concern over anything that
exacerbates the situation in the Middle East.

Alarmed by decreasing world prices for oil, the
Organization of Petroleum Exporting Countries and
the world's other major oil exporters — Russia,
Norway, Mexico and Angola — have agreed to keep
just under 2 million barrels a day off world
markets until the end of June, although the non-
OPEC producers have reserved the right to abandon
the deal earlier.

Under the deal, Russia is supposed to cut its
crude exports through national pipelines by
150,000 barrels a day from the levels of the
third quarter of 2001.

Most of Russia's oil industry is eager to see the
restrictions end. Domestic refineries are
currently paying $4.50 a barrel while foreign
lifters are paying $23 a barrel.

The main losers from Iraq's decision Monday
appear to be Russian oil companies which buy a
large amount of Iraqi crude under the United
Nations' oil-for-food program. Russia, Iraq's top
trade partner and its closest ally on the
Security Council, has long backed Baghdad's
demand to lift the U.N. sanctions.,4186,2

*  SA undecided on oil embargo
News 24, 9th April

Cape Town - South Africa will not decide
immediately whether to seek an alternative source
for a two million barrel oil shipment ordered
from Iraq and caught up in Baghdad's oil export
halt, a senior official said on Tuesday.

Strategic Fuel Fund (SFF) head Renosi Mokate said
that half a four million barrel consignment of
Iraqi Basrah Light ordered by South Africa had
not been paid for or loaded by the time Iraqi
leader Saddam Hussein froze exports for 30 days
on Monday.

"This has only just happened. It is too soon for
us to know what we will do in response to the
Iraqi decision," said Mokate, whose SFF is a
subsidiary of the state's Central Energy Fund.

Saddam took the move in protest against Israel's
incursions into Palestinian-controlled

The SFF awarded a tender in December for four
million barrels for the country's strategic

The reserve has been moved, through a series of
sales and new purchases, from underground storage
in a disused inland gold mine to a more modern
storage and shipment terminal at Saldanha Bay,
Cape Town.

The SFF is responsible for strategic reserves,
but not for commercial purchases.

The shipment had been ordered for delivery by
April 20 to round off a reserve transfer
programme launched in 1999.

Mokate said that though the blocked Iraqi
shipment was for reserve purposes, South Africa
could not necessarily afford to wait indefinitely
for delivery. It was the last shipment of a
programme to build an eight million barrel

"We do have permission to move crude through the
strategic reserve when we think it appropriate to
do so," she said, adding that the SFF was
entitled to trade for profit if an opportunity

Mokate said Imvume Resources and its foreign
strategic partner, Glencore International AG, had
produced all the necessary authorities from the
United Nations and Iraq's own oil company to
deliver the oil under the terms of an oil-for-
food programme.

Iraq is under international sanctions, but is
allowed to trade a limited amount of oil for food
and other essential civilian requirements.

South Africa covers 45% of its oil needs locally
by converting coal and gas into petroleum
products and from small domestic sources.

Imports come mostly from Saudi Arabia, but have
included Nigerian and Iraqi crudes suitable for
the country's refineries.
e_e.asp?e nergy24=249359

*  Lawmaker proposes banning all US imports of
Iraqi oil
World Oil (AFP/Energy 24), 9th April

A top US lawmaker, infuriated by Iraq's temporary
oil export stoppage, on Tuesday vowed to
introduce legislation banning US oil companies
from purchasing any Iraqi oil.
"I have the amendment handy," Republican Senator
Frank Murkowski told reporters, adding he had
already discussed the issue with the White House.
He did not say how President George W. Bush's
administration had reacted to the proposal.

Murkowski was one of a group of Senators and
Jewish community leaders who blasted Iraqi
President Saddam Hussein's decision to halt oil
exports for a month in protest at the United
States backing of Israel in the Middle East

"It's time we not allow Saddam Hussein to dictate
or shape the way we engage foreign policy in the
Middle East," said Senator Larry Craig.

Craig, along with Murkowski, is a fierce
supporter of a contentious plan to open up the
Arctic National Wildlife Refuge to oil drilling
as part of a comprehensive energy bill currently
on the Senate floor.

Supporters of the initiative have presented it as
a national security priority.

"We need to look at the realities of how we're
going to meet our energy needs, with or without
the Mideast to help," Murkowski told the Senate.

Baghdad has made no secret of the fact its
decision aimed at "directly hurting" the US
economy by taking around two million barrels per
day (bpd) off the market, around half of which
ends up in the United States via third parties.

There are "those who seek to destroy the United
States and our great ally Israel," Murkowski
said, describing the war on the Middle East as
a "tinder box" that had exploded.

*  Iraq's oil cutoff will hurt poor nations first
by Abid Aslam
Asia Times (from Inter Press Service), 10th April


Those at risk include the former Asian "tigers"
clawing their way back from economic crises that
began in 1997. "These countries have very little
cushion to absorb these shocks," said Anindya
Chatterjee, Asia strategist at
IDEAglobal. "They've gone through sharp
contraction. They're just beginning to show
symptoms of economic revival. There is a sense
that exports have bottomed out. At a time like
this, an oil price hike can really hurt."

Higher oil prices would drive up the costs of
producing and transporting the exports of such
struggling economies as Thailand and South Korea,
Chatterjee said. "An increase in the costs would
affect profitability and hence investment

"The West is not nearly as dependent upon oil as
it was in 1973," said US-based intelligence
consultants Stratfor. "The United States consumes
only 60 percent as much oil per dollar of GDP
[gross domestic product] generated as it did in
1973," the last Arab oil embargo. The reverse is
true for much of Asia and for countries such as
Brazil: net oil importers whose reserves have
dwindled and whose energy efficiency has stalled
or deteriorated.

Iraq exports oil under a humanitarian exchange
with the United Nations, permitted as an
exception to 1990 Gulf War sanctions. Cash from
the sales is banked in a New York escrow account
controlled by the United Nations and released
only for food and medicines. UN officials
confirmed on Monday that Iraqi oil had stopped
flowing to export terminals.

The United States and Europe are Iraq's major
customers, according to OPEC. Despite
Washington's hostility to Saddam, the United
States buys half of Iraq's oil exports to satisfy
9 percent of US import demand.

Venezuela supplies 15 percent of US oil imports,
according to US government data. Exports
reportedly almost dried up on Monday because of
an escalating dispute at the national oil
company, Petroleos de Venezuela, between some
managers and new executives appointed by
President Hugo Chavez.

OPEC's 11 members account for 41 percent of the
world's crude-oil production and 55 percent of
the oil traded internationally, according to the
cartel's website,,,3-

*  Saddam oil threat justifies drilling in
Alaska, says Bush
by Damian Whitworth
The Times, 10th April

PRESIDENT BUSH is using Iraq's threat to curtail
the world's oil supply to try to save his
cherished hope of opening up Arctic Alaska to
exploration, as Republicans on Capitol Hill
appear to be losing the battle over the issue.

With the Democratic-controlled Senate determined
to kill plans to drill in the Arctic National
Wildlife Refuge, Republicans are considering
abandoning a key vote on the matter. Mr Bush, who
has put exploitation of the reserve's coastal
plain at the heart of his energy plan, said that
Saddam Hussein's decision to halt oil exports in
protest at Israel's action in the West Bank
proved the need to make the US more self-reliant
in oil production.

Mr Bush told business leaders that Saddam would
try to cut off America's energy supply,
adding: "What more reason do we need than to have
good energy policy in the United States to
diversify away from somebody like him?" The
refuge is a 1.5 million-acre stretch of
wilderness along Alaska's coastal plain and Mr
Bush's plan to investigate its oil potential has
been opposed by environmentalists and Democrats
since the presidential election. The Interior
Department estimates that a new Alaskan field
would supply 1.9 million barrels of oil a day.
The US uses 19 million barrels a day, about
800,000 barrels a day from Iraq, its sixth
biggest supplier. Mr Bush said: "Once production
is up and running, on a very small footprint in
the middle of this vast country, we can produce
as much oil as Iraq produces on the world

He will be hoping that he can convince enough
Republicans and moderate Democrats to support
drilling in an amendment to the energy Bill that
is being debated this week. So far only 40 out of
100 senators have said that they are in favour of
opening the refuge, 50 are against drilling and
ten are undecided.

Rather than allow Mr Bush to suffer a major
defeat in a vote this week Republicans are
suggesting that the entire matter should be
postponed. It would then be revived when the
House, which has already passed its own Bill
supporting drilling, meets the Senate in
committee to iron out differences in their two

Such a committee is almost certain to come up
with a compromise and Republicans believe that
that may be their best hope, given the public
antipathy to exploration. One possibility might
be a proposal to open up just the northwestern
third of the reserve, but even that would face
fierce Democratic opposition.

Mr Bush's difficulty is that in a Congressional
election year there is wariness on Capitol Hill
about being too closely associated with the Bush
Administration on energy issues. Ever since the
presidential election Mr Bush and his Vice-
President, Dick Cheney, have been cast as former
oilmen with close links to their friends in the
industry. The collapse of Enron, Mr Bush's
biggest political patron, has only enhanced that
image problem and Mr Cheney has been under fire
over his discussions with energy bosses while
drafting the White House energy plan.

Opponents of drilling question how much oil
exists in the region and are portraying Mr Bush
as overly eager to please his sponsors. John
Kerry, a Democratic senator and likely
presidential candidate, said: "In the last year
they've tried every excuse under the Sun to
destroy the pristine wilderness — California's
energy crisis, a sagging economy, the war on
terrorism — and those excuses have failed because
US senators know the difference between real
energy policy and big oil's lust for our last
acres of pristine wilderness."

*  Jordan and the Iraqi oil
Arabic News, 10th April

Jordan has stressed that supplies of the Iraqi
oil to it will not be affected by the decision
taken by Iraq to stop its oil exports to the
world for one month. A decision taken on Monday
by Iraq in protest of the flagrant Israeli
aggression against the Palestinian people.

The Jordanian minister of energy and mineral
resources Muhammad al-Batayneh said that Jordan
is contacting with Iraq to this effect, stressing
that Jordan will not be affected by this decision
because its oil supplies are made by trucks.

Other Jordanian governmental sources said that
Jordan is linked to Iraq by bilateral agreements
and it was never the case that Iraqi oil supplies
to Jordan were obstructed despite all conditions
the region had passed.

*  IRAQ DIARY, Part 6: Oil and troubled waters
by Pepe Escobar
Asia Times, 11th April

FAO, on the Iran-Iraq border - From this
particular point of view - right in the middle of
the rich oilfields of both Iraq and Iran - Saddam
Hussein's decision to freeze all Iraqi oil
exports for one month from Monday as punishment
for United States support of Israel's military
onslaught in Palestine feels like a nuclear bomb
is about to be exploded.

For the moment, the measure affects only 3
percent of the world market. But if followed by
other Organization of Petroleum Exporting
Countries (OPEC) member nations - such as Iran,
Libya or Venezuela - it could provide the White
House and the Pentagon with the perfect excuse to
attack Iraq sooner rather than later. The United
States ranks ninth as an importer of Iraqi oil.

The all-important paragraph of Saddam Hussein's
speech - endlessly replayed on Iraqi TV - reads
as follows in the official Iraqi News Agency
translation: "The Revolution Command Council, the
Iraqi leadership of the Baath Arab Socialist
Party, and the cabinet in their meeting on April
8, 2002, declare, in the name of the faithful,
honest, mujahid, noble, Iraqi people: completely
stopping oil exports starting from this afternoon
April 8, through the pipelines going to the
Turkish port on the Mediterranean, and our ports
in Basra for a period of 30 days, after which we
will further decide, or until the Zionist
entity's armed forces have unconditionally
withdrawn from the Palestinian territories they
have occupied and have shown respect for the will
of the Palestinian people and the Arab nation to
sovereignty, security, dignity and life."

For the Revolutionary Command Council - the
supreme executive power in Iraq - both Baghdad
and Ramallah in Palestine represent the same
struggle. This is the core of the Iraqi diplomacy
for the crucial next few months - while for the
Bush administration the two thorny issues are
absolutely delinked. The only foreign news on
Iraqi TV is Palestine, most of the images
borrowed from al-Jazeera and Abu Dhabi TV. The
pan-Arabism of the regime is more than evident in
an array of explosive video clips dedicated to
the Palestinian cause.

Recently, in Kufa and Najaf - the holiest cities
in Islam after Mecca, Medina and al-Quds
(Jerusalem) - Asia Times Online learned about the
existence of training camps where Iraqi
volunteers are being prepared to fight a jihad
against the "Zionist entity" alongside their
Muslim brothers in Palestine.

Muhamad Abdel Saheb is in charge of the protocol
department of the Kufa mosque - where Ali, the
Prophet Muhammad's brother-in-law, was mortally
blessed in 631. Kufa is the birthplace of the
Shi'ite faith. Saheb says that "we Iraqis are
waiting for a sign from the president to declare
a jihad. If the president makes a sign, everybody
will answer his call". Saheb stresses that "jihad
and political struggle, it is the same thing".

In Najaf, where the "Prince of the Believers" Ali
is buried in a magnificent mausoleum, the imam,
Dr Haider Muhamad Hasan Alkelydar, confirmed the
existence of the jihad training camps, some of
them shown on Iraqi TV. Government officials such
as Ahmed, who works in the Najaf administration,
are able to say, "I want to be a martyr in
Palestine. I can't do it only because I have to
take care of my mother and my wife."

Fao is also Shi'ite country. On the road from
Basra to Fao, about 10 kilometers away, lies
Iran, with Iraq and North Korea a part of
Washington's axis of evil. Behind a bridge over
the river Al Karon it is possible to see Abadan -
arguably the largest refinery in the world - its
steel tubes gleaming against the sky. Most of the
terrain is still heavily mined, a memory of the
Iran-Iraq war of several decades ago. By the
roadside, black billboards exhort the glory of
Iraqi martyrs.

Fao lies beside the Shatt-el-Arab, where Iran and
Iraq are separated by a river stream no wider
than 800 meters. About 5,000 fishermen live on
the Iraqi side. Iranian police boats patrol the
river, enforcing a virtual divide to ensure that
the locals don't practice their fishing in the
neighboring country's waters. The absolute
majority of the boats and trawlers carry the
Iraqi flag.

On the Iranian margin there's a "monument to the
martyrs". During the Iran-Iraq war, the Iranians
repeatedly tried to build a bridge over the
river, always bombed by the Iraqis. The Iranians
thought the occupation of Fao during the war, in
1986, was definitive. But the Iraqis took the
city back in 1988 through the operation "Blessed
Ramadan" coordinated by Saddam Hussein. After
Fao, Iran lost any hopes of winning the war. Fao
was rebuilt through a popular campaign, but again
partially destroyed by American bombing during
the Gulf War in 1991.

To learn about Saddam Hussein's desire to
coordinate an oil shock such as in 1973, uniting
all the Arab world is all the more powerful when
juxtaposed with the fact that Iran has already
approved an Iraqi proposal to use oil as a

Even before Monday's decision, oil was the
incendiary issue in Iraq. Asia Times Online had
definitive assurances from Paris and then Baghdad
that it was possible to examine the current state
of the Iraqi oil industry in Basra. But then we
learned on the spot, on Saturday, that since
April 1 there's been absolutely no way to visit
the oilfields. We were still in Baghdad at the
time, but we were not informed.

A spokesman from the governor's office in Basra
says that the order came from the Ministry of
Communication. He adds that a British
Broadcasting Corp team waited in Basra for a week
trying to do the same thing, and then left empty-
handed. The reason for the ban, "We are in a
state of war." Later, we learn from the
Information Ministry in Baghdad that the order
actually came from the Oil Ministry: the decision
was made by the Revolutionary Command Council.

We remind Basra officials that the Ministry of
Information in Baghdad stressed that the
governorship of Basra would facilitate any
authorizations for a visit to the oil fields in
southern Iraq, and also to the port of Abu Bakr.
A cabinet secretary finally agrees to set up an
interview so that we can have some sort of
explanation straight from the governor of Basra.
The next day, one Karin Murad, the governor's
director of information, again changes the rules.
For starters, all the questions in the interview
have to be submitted in advance. And the governor
does not take questions related to oil.

Ten minutes later, even more changes. Murad says
that Basra was waiting for permission from the
Ministry of Interior for the governor to be
interviewed - and the permission was denied. The
previous day, the cabinet secretary had the
permission from the governor himself for the
interview. Murad then says that we can "shake the
governor's hands". We decline.

The episode reveals one of two things: either the
Shi'ite southern administration does not care to
observe any demands from the central government -
and it is already busy preparing a secession; or,
more probably, the "state of war" paranoia is a
diversionist tactic to cover the fact that any
minor decision in Iraq has to be fully
scrutinized by the central government.
Consequently, for the moment the oil industry is
off-limits to "foreign spies".

As far as Saddam Hussein's explosive gesture is
concerned, for the Iraqi and Arab world mindset,
the US has given a free hand for Israel to
destroy the Palestinian Authority. An united Arab
world might be able to exert some kind of
pressure for the US to rein in Ariel Sharon. But
it is getting increasingly harder to figure out
how Iraq might be able to convince the Arab world
and other OPEC countries to stand up against
America - and simultaneously prevent a wrathful,
inevitable American attack on itself.,4186,2

*  Oil slumps as Chavez ousted
News 24, 12th April

London (Reuters): Oil prices fell heavily on
Friday after Venezuelan President Hugo Chavez
resigned under pressure from the military,
reigniting oil market fears that the Opec
producer might revert to a policy of cheating on
cartel output limits.

Staff at the Venezuelan state oil company ended a
strike that hit exports this week and said they
would resume normal supplies from the world's
fourth largest exporter.

Brent blend crude for June ended down US$1.44 in
London at $23.19 a barrel. In New York, US light
crude slumped $1.68 to $23.31 a barrel, a five-
week low.

Chavez was arrested by the military in the wake
of a massive demonstration on Thursday when 15
people were killed by snipers that officers said
were allies of Chavez. Businessman Pedro Carmona
will lead a transition government before an

When Chavez came to power in 1999 he ensured the
Latin American producer observed its Opec output
limit after years of quota cheating.

But the head of sales at state company Petroleos
de Venezuela (PDVSA) said after Chavez's ousting
that production should be set according to market
conditions and not Opec quotas.

"Let's not talk about quotas. Let's talk about
the possibilities Venezuela has in the petroleum
business," Edgar Paredes told reporters at a
press conference.

"If we've got the resources and the market
provides us with possibilities, we should take
advantage of them."

Former Venezuelan Oil Minister Humberto Calderon
Berti, an ally of Carmona's, said the next
government might well abandon Chavez's strict
application of Opec quotas and recapture market
share lost over his three-year tenure.

"I think policy will be changed. It will be
orientated more towards capturing markets while
maintaining ties in Opec. Its going to be a
policy of production expansion within Opec in an
orderly way," he said.

Chavez ordered a change in oil policy following
the collapse of crude prices in 1998, caused in
part by the previous Venezuelan government
ignoring its Opec quota. Caracas fell out with
leading cartel power Saudi Arabia and oil slumped
below $10 a barrel.

A heavy slide in Venezuelan oil production
capacity during the Chavez years might mean a new
government will be unable to threaten any early
repeat of pre-Chavez policy.

Chavez came under pressure to quit after
executives and workers at PDVSA began protests
six weeks ago. The dispute widened this week with
business and labour leaders backing an indefinite
general strike. On Friday dissident PDVSA
employees were heading back to work and pledged
to return exports to normal.

"We are going to get PDVSA going as it normally
does and that should be 100 percent starting
Monday," said Luis Roja, President of PDVSA Gas.

Venezuela is the world's fourth largest oil
exporter and a leading supplier to the United
States. As much as 500 000 barrels a day of its
2.6 million bpd of crude output was cut by the
strike and refinery operations severely
curtailed. Last year Venezuela accounted for 13%
of U.S. petroleum imports.

click_id=345&art_id=qw1018596961926I515&set _id=60

*  Imvune boss was named in UN probe into Iraqi
oil deals
by Edward West
Business Report (South Africa), 12th April

Cape Town - Sandi Majale, the chairman of Imvume
Resources, the oil trading empowerment company
that has won a R1 billion state tender to supply
4 million barrels for the strategic oil reserves
in Saldanha Bay, used to be a director and co-
owner of a local oil trading company called
Montega Trading.

Last year Montega Trading was implicated in a UN
investigation into the alleged busting of
sanctions on the sale of Iraqi oil.

Renosi Mokate, the head of the Strategic Fuel
Fund (SFF), which awarded the tender, said the
fund was aware that Majale had been implicated
along with a Swiss company, Glencore

But the two companies had never been called on to
repay the $3 million profit they were supposed to
have made on the oil deal, and Glencore had
subsequently been allowed to continue to buy
Iraqi oil, Mokate said.

So far, 2 million barrels of the R1 billion, 4
million barrel tender for the supply of Basrah
light have been loaded on to the vessel Sebang
under UN approval and are due to be loaded into
the Saldanha storage tanks towards the end of the

Mokate said the fate of the other 2 million
barrels would be known within a matter of days,
considering Iraq's one-month suspension of oil

The oil was purchased in terms of the Iraqi "oil-
for-food programme". Under this programme, the
price of oil is fixed and the proceeds from its
sale must be handed over to the UN.

In terms of the latest R1 billion tender, the oil
was bought from Iraq by a Russian company called

It was then sold to Glencore International, sold
again to Imvume, and finally sold to the SFF.

Lawrence Venkile, a spokesperson for Imvume
Resources, said Majale had since disposed of his
equity in Montega Trading.

Referring to Montega's involvement in the alleged
sanctions busting, Venkile said that as far as he
was aware, Montega Trading had bought the oil
last year from the Iraqi state oil marketing
company Somo.

Montega had then contracted Sopak, a subsidiary
of Glencore International, to do the shipping and
marketing of the crude oil.

Montega at the time had not been unaware of the
problems associated with Sopak's diversion of the
oil to Croatia, but Montega had since resolved
its issues with Glencore, while Glencore had been
allowed by the UN to continue trading in Iraqi
oil, he said.

Glencore used to be owned by controversial
financier Marc Rich and was sold to a Russian

*  Oil Companies Lose Faith in Iraq Contracts
by Dmitry Zhdannikov
Moscow Times, 12th April

Oil firms cannot tap Iraq's reserves because of
sanctions, but would have to compete with Western
majors if sanctions are lifted.

  Russian oil firms, once the biggest friends of
Iraqi leader Saddam Hussein, say they have lost
hope that deals they signed to develop Iraq's
vast oil and gas deposits will ever be fulfilled
under the current regime.

Sources in Russian companies said that as long as
Saddam remains in place, they no longer believe
the United Nations will lift sanctions against
Baghdad and pave the way for tapping into Iraqi
oil reserves, the second-largest in the world.

And if Saddam were removed, the Russians would
lose their advantage, as foreign rivals are
already prepared to move in.

"We do not have any illusions any more. It's
clear that the United States will never allow us
to work in Iraq under Saddam. And we ourselves
are not rushing any more either. We are waiting,"
a senior source in a Russian oil major said.

"How can you lift sanctions against someone they
call an axis of evil?" said a senior source at
another large Russian firm that has agreements to
invest in Iraq.

"We can go on only with small contracts. Large
deals are hopeless. First due to sanctions.
Eternal sanctions until Saddam quits. And when he
quits, Russian firms will face very tough
competition from Western rivals," another senior
source said.

U.S. President George W. Bush has called Iraq
part of an "axis of evil," along with Iran and
North Korea, and says he wants Saddam removed
from power.

Friends in the Soviet era, Russia and Iraq kept
close political and economic ties after the
Soviet Union collapsed in 1991 and United Nations
trade sanctions were slapped on Baghdad after its
1990 invasion of Kuwait.

Russian firms, bolstered by Moscow's ties with
Baghdad, are among the largest lifters of Iraqi
crude under the UN oil-for-food program. They are
annually buying oil worth $5 billion.

They are also keen to tap into Iraqi oil reserves
and have signed a number of deals with Bagdad.

But work has been frozen due to sanctions.

Russia's biggest oil firm, LUKoil, agreed in 1997
to invest together with Zarubezhneft and
Mashinoimport $4 billion into the huge West Qurna
oil field, which has total reserves of 8 billion
barrels, but refused to defy sanctions by
starting work.

This was also the case with state-owned medium-
sized oil firm Slavneft, which agreed to develop
the Subba oil deposit in Iraq with reserves of up
to 800 million barrels.

Each year, Russian companies have said they hoped
to start investing in Iraq very soon, expecting
the end of sanctions. But lately they have
stopped making optimistic statements.

However, some companies said smaller, existing
contracts with Iraq allowed under sanctions, such
as oil service or oil-trading deals, were
profitable enough to make participants happy
despite growing tension between Baghdad and the

Gazprom signed contracts worth $18 million to
repair gas stations in Iraq and supply trucks and
machines. Oil firms Tatneft, Slavneft and
Zarubezhneft have deals worth tens of millions of
dollars to drill oil wells in Iraq to help the
country maintain oil output.

Iraqi Deputy Prime Minister Tareq Aziz said
earlier this month that a continuation of these
deals with Russian firms could be at risk if U.S.
proposals to tighten up sanctions were passed at
the United Nations in late May with Moscow's

On Monday, Saddam announced an immediate
suspension of Iraq's oil exports for a month in
protest against U.S. support for the Israelis
incursion into Palestinian areas of the West

"We have survived previous halts and kept earning
real money. So will survive this one as well," a
source said.

Such deals could one day be threatened by Western

"I'm not sure that under either scenario, either
the end of sanctions or the fall of the regime,
we can survive the competition with rich Western
majors," said a source in a company with both a
drilling and a trading contract.

But some Russian firms said they were not afraid
of rivals after enjoying high oil prices in
recent years and added they expected to keep even
large contracts.

"The West Qurna contract is recognized
internationally, and we recently got some
positive signs [from Western countries] who said
it would never be subject to any revision," said
a source in the West Qurna consortium.

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