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8 January 2002  

Oil-for-Food Background Information


An Update

(15 December 2001 – 4 January 2002)

The Executive Director of the United Nations Iraq Programme, Benon V. Sevan, is scheduled to undertake a working visit to Iraq, starting on 14 January 2002, to review, together with relevant authorities, the United Nations Humanitarian Coordinator in Iraq, Tun Myat, and representatives of the United Nations agencies and programmes, the implementation of the United Nations oil-for-food programme.  Mr. Sevan’s last visit to Iraq was in August 2000.

In a letter dated 7 January 2002, addressed to the Chairman of the Security Council Committee established by resolution 661 (1990), the Executive Director of the Iraq Programme expressed grave concern at the unprecedented surge in the volume of holds placed on contracts by the Committee, with the total value reaching just under $5 billion ($4.956 billion).  The “holds” covered 1,854 contracts for the purchase of various humanitarian supplies and equipment, including 1,265 contracts, worth $4.28 billion, for humanitarian supplies and 589 contracts, worth $676 million, for oil industry equipment.

There were 206 contracts, worth  $353 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 334 contracts, worth $942 million, 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 ending on 4 January 2002, the Committee released from hold 14 contracts, worth $40.9 million, while placing on hold 63 new contracts, worth $229 million.

Under the United Nations oil-for-food programme, Iraq exported a total of 38.3 million barrels of oil in the period 15 December 2001 and 4 January 2002, including 9.7 million barrels in the week 15 – 21 December, 13.1 million barrels in the week 22 – 28 December and, 15.5 million barrels in the week 29 December 2001 - 4 January 2002.

These exports were completed through 25 loadings from the two authorized loading terminals of Mina al-Bakr and Ceyhan, of which 12 took place at Mina al-Bakr, with 20 million barrels of oil, and 13 loadings at Ceyhan, with 18.3 million barrels.  The average price of Iraqi crude oil, during the week ending on 4 January 2002, was approximately €19.60 (euros) or $17.70 per barrel.

Since the start of current phase XI of the programme on 1 December 2001, some €876 million or $788 million in estimated revenue has been generated from the export of 50.7 million barrels of oil, based on current prices and rate of exchange.  There are now 71 oil purchase contracts approved by the United Nations oil overseers for the current phase, covering 180.8 million barrels of oil, of which 106.1 million barrels are for Basrah Light and 74.7 million barrels for Kirkuk crude.  Phase XI ends on 29 May 2002. 

Iraqi oil exports have earned an estimated $38.6 billion and €13.5 billion ($11.8 billion) in revenue from the sale of over 2.85 billion barrels of oil since the beginning of the programme on 10 December 1996.  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.

During the same period, some $30.9 billion worth of contracts for humanitarian supplies and equipment have been both approved by the 661 Committee and “fast-tracked” by the Office of the Iraq Programme (OIP), including $2.7 billion worth of contracts for oil industry spare parts and equipment.  To date, humanitarian supplies and equipment worth $18.3 billion have been delivered to Iraq, including $1.1 billion worth of oil industry equipment, while another $10.9 billion worth of humanitarian supplies and $1.7 billion worth of oil industry equipment are in the production and delivery pipeline.

At the end of the reporting period, about $1.7 billion and €461 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