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5 September 2001  

Oil-for-Food Background Information


Weekly update

(25 - 31 August 2001)

The Security Council’s 661 sanctions committee on Iraq has not yet decided on the price of Iraqi crude oil sold to the United States market during September.  A pricing mechanism was proposed by the Iraqi State Oil Marketing Organization (SOMO) in late August.  The Committee has approved SOMO-proposed pricing mechanisms for the European market, covering the period 1 – 15 September, and the Far East, for the entire month of September.  Iraq sells two types of crude oil, Basrah Light and Kirkuk, to three different markets – Europe, Far East and the United States.

The volume of Iraqi oil exports under the United Nations oil-for-food programme fell back to 13 million barrels in the week 25 – 31 August, down from the previous week’s high of 16.8 million barrels.  There were eight loadings in total – five from Mina al-Bakr terminal, with 9.2 million barrels, and three from Ceyhan, with 3.8 million barrels.

The average price of Iraqi crude oil during the week was approximately €25.32 or $23.04 per barrel. The week’s exports added an estimated €329 million (euros) or $300 million, at current prices and rates of exchange, to the total revenue raised in current phase X, which now stands at €2.48 billion ($2.26 billion).  So far in phase X, which is in effect from 4 July to 30 November 2001, oil lifted from Iraq amounts to 109.3 million barrels.  There are 107 approved oil purchase contracts for 294 million barrels of oil, of which 171 million are for Basrah Light and 123 million for Kirkuk.  These include nine new contracts approved by the United Nations oil overseers during the week. 

Since the beginning of the programme on 10 December 1996, an estimated $38.6 billion and €9.1 billion ($7.9 billion) in revenue has been generated from the Iraqi oil sales of some 2.6 billion barrels.  With the adoption of Security Council resolution 1330 (2000) on 5 December 2000, 72 per cent of the oil proceeds fund the humanitarian programme in Iraq, 59 per cent of which is for the 15 central and southern governorates and 13 per cent for the three northern governorates.

The value of contracts placed on hold by the 661 Committee rose to $3.76 billion, up from the previous week’s total of $3.58 billion.  The Committee released from hold 28 contracts, worth $93.5 million, while placing on hold 46 new contracts, worth $256.4 million.  A single high-value contract for the electricity sector, worth $105 million, contributed to the overall increase in the “holds”.   Altogether at the end of the week, 1,504 contracts were on hold, of which 1,032 contracts, worth over $3.2 billion, were for humanitarian supplies and 472 contracts, worth $507 million, were for oil industry spare parts and equipment.

Since the start of the programme, $25.6 billion worth of contracts for humanitarian supplies and another $2.2 billion worth of contracts for oil industry spare parts and equipment have been approved by the 661 Committee and “fast-tracked” by the Office of the Iraq Programme (OIP).  Of these, more than $14.4 billion worth of humanitarian supplies and $882 million worth of oil industry spare parts and equipment have been delivered to Iraq.  Another $11.2 billion worth of humanitarian supplies and $1.3 billion worth of oil spare parts and equipment are in the production and delivery pipeline.

As at 31 August, over $1.4 billion and €696 million in unused 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