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18 June 2002
Oil-for-Food Background Information


Weekly Update

(8 – 14 June 2002)

 On 13 June 2002, the Secretary-General advised the President of the Security Council of his approval of the distribution plan for phase XII, as submitted by the Government of Iraq.  The plan is based on a foreseen budget of over $5.08 billion for the purchase of humanitarian supplies and equipment in 25 sectors, including food, health, agriculture, education, electricity, telecommunications, transport, housing, water and sanitation, among others.  Phase XII distribution plan indicates 10 new sectors, namely, constructions, industry, labour and social affairs, Board of Youth and Sports, information, culture, religious affairs, justice, finance and Central Bank of Iraq.  The plan constitutes the basis for the contracting of goods by the Government of Iraq with suppliers of its own choosing.  Phase XII runs from 30May to 25 November 2002. 

In terms of Iraqi oil exports during the week under the United Nations oil-for-food programme, the volume remained sluggish, with only two liftings at the loading terminal of Mina al-Bakr, totaling 3.1 million barrels.  There were no liftings at the second authorized loading terminal of Ceyhan.  The week’s exports netted an estimated €71 million (euros) or $67 million in revenue, at current prices and rate of exchange, bringing the total estimated revenue in phase XII to €331 million or $313 million.  The average price of Iraqi crude oil was approximately €22.85 or $21.55 per barrel.  

There are now 95 oil purchase contracts approved by the United Nations oil overseers in phase XII, including 17 new contracts approved during the week in review.  This covers over 184 million barrels of oil, of which 104 million barrels are for Basrah Light and 80 million barrels for Kirkuk crude.  Iraq, so far in this phase, has exported 14 million barrels of oil. 

Owing to a funding shortfall, currently 964 humanitarian supply purchase contracts, worth more than  $2.24 billion, although approved by the United Nations, cannot be further processed.  The sectors where funds are lacking are food handling with over $367 million, electricity with $341 million, food with $334 million, housing with $314 million, agriculture with $270 million, health with $176 million, telecommunication/transportation with $173 million, water and sanitation with $115 million, education with $99 million and oil spare parts/equipment with $53 million. 

Since the beginning of the programme on 10 December 1996, Iraq has generated an estimated $38.6 billion and €17.9 billion ($15.9 billion) in revenue from the export of over 3 billion barrels of oil.  With 72 percent of the oil proceeds allocated to the humanitarian programme, some $35.4 billion worth of contracts for the purchase of various humanitarian supplies and equipment have been both approved by the Security Council’s 661 sanctions committee and “fast-tracked” by the Office of the Iraq Programme (OIP), including about $3.2 billion worth of oil industry spare parts and equipment. To date, some $22.8 billion worth of supplies and equipment have been delivered to Iraq, including $1.4 billion worth oil spare parts and equipment, while another $10.4 billion worth of supplies and equipment, for which funds have been available, are in the production and delivery pipeline, including $1.7 billion worth of oil industry equipment.  

During the week, the 661 Committee released from hold 23 contracts worth $45 million, while placing on hold 19 new contracts worth $33 million.  There are currently 2,123 contracts on hold for the purchase of humanitarian supplies and equipment, valued at just under $5.2 billion, including 1,448 contracts worth about $4.5 billion for humanitarian supplies and 675 contracts worth $730 million for oil industry spare parts and equipment.  

Paragraph 18 of the new set of procedures for the processing and review of contracts for humanitarian supplies and equipment under Security Council resolution 1409 (2002) requires that contracts currently on hold be divided into two categories.  The first category would comprise contracts that contain “dual use” item(s), as determined by the United Nations Secretariat experts, which will be returned to the submitting Mission or United Nations agency for possible re-submission under the new procedures.  The second category would include all other contracts currently on hold and will be re-circulated by OIP under the new procedures.  It is foreseen that upon the completion of these processes, there will no longer be contracts on hold.


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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