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4 December 2001  

Oil-for-Food Background Information


Weekly Update

(24 - 30 November 2001)

On 1 December 2001, in identical letters addressed to the Chairman of the Security Council’s 661 sanctions committee and to the Permanent Representative of Iraq to the United Nations, the Executive Director of the Iraq Programme informed that an amount of $84 million in excess funds are being transferred from the United Nations Iraq account, designated for UN administrative and operational costs under the oil-for-food programme, to the account identified for the purchase of humanitarian supplies by the Government of Iraq in the 15 central and southern governorates. The savings were the result of UN administrative and operational cost-minimizing efforts, as directed by the Secretary-General, and were accrued under phase X of the programme, which ended on 30 November 2001.

This is the third such transfer of excess funds. In September 2000, an amount of $52 million, constituting UN cost-savings at the end of phase VII, were transferred for the purchase of humanitarian supplies by Iraq, while another $75 million were transferred to the same account in July 2001, representing UN administrative and operational savings at the end of phase VIII. To date, a total of $211 million in UN administrative and operational cost-savings has been redistributed towards the purchase of humanitarian supplies by the Government of Iraq in the 15 central and southern governorates. Owing to the substantial decrease in oil revenues during phase IX, no excess funds were available for such redistribution, as in fact, a shortfall was recorded.

The last oil liftings under phase X were completed on 30 November, registering a total of 18.7 million barrels in that week’s exports, for an estimated €334 million (euros) or $295 million in revenue, based on current prices and rate of exchange. There were 12 loadings from the two authorized terminals of Mina al-Bakr and Ceyhan, with 11.7 million barrels of oil from the former and seven million barrels from the latter. The average price of Iraqi crude oil was approximately €17.85 or $15.75 per barrel.

The final estimated revenue in phase X of the programme was €5.94 billion or $5.29 billion derived from the export of 300 million barrels of oil. In the same phase, there were 144 approved oil purchase contracts for 396 million barrels of oil.

The Security Council adopted resolution 1382 (2001) on 29 November, launching phase XI of the oil-for-food programme, which runs from 1 December 2001 to 29 May 2002.

Since the beginning of the programme on 10 December 1996, Iraq has generated an estimated $38.6 billion and €12.6 billion ($10.9 billion) in revenue from the export of almost 2.8 billion barrels of oil. 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.

Also since the start of the programme, over $30.35 billion worth of humanitarian supply contracts have been both approved by the Security Council’s 661 sanctions committee and “fast-tracked” by the Office of the Iraq Programme (OIP), including $2.6 billion worth of contracts for oil industry spare parts and equipment. Of this total, about $16.5 billion worth of humanitarian supplies and $1 billion worth of oil industry equipment have been delivered to Iraq, while another $11.2 billion worth of humanitarian supplies and $1.6 billion worth of oil industry equipment are in the production and delivery pipeline.

The total value of contracts placed on hold by the 661 Committee stood at $4.37 billion, up from the previous week’s total of $4.23 billion, covering 1,529 contracts for the purchase of various humanitarian supplies and equipment. There were 146 contracts, worth $273.7 million, in the “inactive holds” category, for which the suppliers had not provided the requested additional technical information in excess of 60 days. In the category of “active holds” there were 330 contracts, worth over $1 billion, for which although the suppliers had provided the requested information, the holding Committee member(s) had not made a final decision in excess of 60 days.

During the week, the Committee released from hold five contracts, worth $3.1 million, while placing on hold 57 new contracts, worth $156.4 million. In all, 1,006 humanitarian supply contracts, worth $3.57 billion, and 523 oil industry equipment contracts, worth $524 million, were in the “active holds” category.

As at 30 November, about $1.7 billion and €620 million in unused funds were available in the United Nations Iraq 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