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19 June 2001  

Oil-for-Food Background Information


Weekly update

(9 - 15 June 2001)

Iraq’s suspension of its oil exports under the United Nations oil-for-food programme continues into the second week. 

In current extended phase IX, which ends on 3 July, Iraq has exported 293 million barrels of oil for an estimated €6.7 billion (euros) or $5.8 billion in revenue, at current prices.  Altogether, in phase IX there are 174 approved contracts for the lifting of over 571 million barrels of oil, 351 million barrels of which are for Basrah Light and 220 million for Kirkuk.  The average price of Iraqi crude oil during the week was approximately $23.09 or €28.00 per barrel.

Since the beginning of the programme on 10 December 1996, Iraq’s oil exports have totaled about 2.5 billion barrels and have raised an estimated revenue of some $38.6 billion and €6.7 billion (or $5.8 billion at the current exchange rate).  The US dollar was replaced with the euro for the Iraqi oil purchases in early November 2000, at the request of the Government of Iraq and with the authorization of the Security Council’s 661 sanctions committee for Iraq.

There was a further welcome development with regard to “holds” last week.  The Security Council’s 661 sanctions committee approved four contracts worth $10.48 million for several types of human vaccines on the condition that the United Nations observers in Iraq closely monitor the end-use of those supplies.  Some of the approved vaccines are on the “1051 list” and had been put on hold by the Committee.  Once delivered to Iraq, the supplies are expected to meet the reported shortages of human vaccines in the country.

Similarly, contracts for steel, generator sets and pesticides, some containing “1051” items, were approved by the Committee on condition of close end-use monitoring by the United Nations observers in Iraq.  This welcome development is also indicative of an increasing confidence by the 661 Committee in the ability of the United Nations observation mechanism to verify that supplies and materials delivered to Iraq under the programme are indeed being utilized for approved purposes.  The United Nations Secretary-General and the Executive Director of the Iraq Programme have repeatedly appealed to both the Security Council and its 661 Committee to place greater confidence in the work of the United Nations observation mechanism in Iraq to release contracts from hold and expedite the approval and delivery of needed humanitarian supplies to Iraq.

During the week, 69 contracts worth $58.7 million were released from hold by the Committee and 30 new contracts valued at $74.9 million were placed on hold.  The “releases” included two telecommunications contracts for a microwave monitoring system and a microwave station equipment, eight contracts in the health sector for various medical equipments and laboratory reagents, five contracts in the education sector, 22 for oil industry spare parts and equipment, as well as a number of contracts for cranes, trucks and irrigation systems.  The new “holds” covered tipper trucks, water treatment equipment, tractors, water pumps and medical equipment.  The Committee members requested additional technical information or cited the presence of “1051” or “dual-use” items for placing these contracts on hold.

The total value of contracts on “hold” stood at $3.17 billion, representing 14.7 per cent of the value of all contracts circulated to the Committee.  Of the total 1,294 contracts “on hold”, 858 worth $2.74 billion were for humanitarian supplies and 433 worth $426 million for oil industry spare parts and equipment.                

Since the start of the programme, the 661 Committee has approved 8,206 contracts worth $16.92 billion for humanitarian supplies, while another 2,148 contracts valued at $4.85 billion have been processed by OIP under “fast-track” procedures, based on pre-approved lists of supplies.  In addition, the Committee has approved 2,624 contracts worth $1.45 billion for the purchase of oil industry spare parts and equipment, with OIP having “fast-tracked” another 299 contracts worth $250 million in this category of goods.

As at 14 June 2001, approximately $2.2 billion and €1.85 billion in unencumbered funds were available in the United Nations escrow account for the issuance of additional letters of credit for the purchase of humanitarian supplies and oil spare parts and equipment by the Government of Iraq.

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Produced for media and public information – not an official United Nations Document
For further information please contact Hasmik Egian, OIP - NY, 1.212.963.4341