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27 August 2002
Oil-for-Food Background Information


Weekly Update

(17-23 August 2002)

With the implementation of the new set of procedures under resolution 1409 (2002) on 15 July 2002, some $126 million worth of supplies under 100 contracts previously on hold by the Security Council’s 661 sanctions committee, have now been re-assessed as not to contain Goods Review List (GRL) items and, therefore, approved by the Office of the Iraq Programme (OIP). These include a contract for 16 oxygen plants for the production of medical oxygen valued at $58 million, which had been on hold for almost a year because of “military dual use” concerns. There remain 1,877 humanitarian supply contracts on hold worth about $4.7 billion, of which 1,294 contracts worth about $4 billion are for humanitarian supplies and 583 contracts worth $686 million are for oil industry spare parts and equipment.

Paragraph 18 of the new set of procedures divides contracts on hold into two categories. The first category comprises contracts that contain “dual use” item(s), as determined by the United Nations Secretariat experts, which are returned to the submitting Mission or United Nations agency for possible re-submission under the new procedures. There are 163 contracts valued at $247 million in this category. The second category includes all other contracts on hold which are re-circulated by OIP under the new procedures. This process will be concluded by mid-September and with the completion of their re-assessment by the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and by the International Atomic Energy Agency (IAEA) in mid-October, it is foreseen that there will no longer be contracts on hold.

Averaging just over 757,000 barrels per day, Iraqi oil exports under the United Nations oil-for-food programme declined again from last week’s slight surge at 7.2 million barrels to a total of 5.3 million barrels during the week ending 23 August. Completed in six loadings, two from Mina-al-Bakr with 1.5 million barrels and four from Ceyhan with 3.8 million barrels, the week’s exports yielded an estimated revenue of €140 million (euros) or $137 million, at current prices and rate of exchange. The average price of Iraqi crude oil was approximately €26.50 or $25.85 per barrel.

Total shipments of Iraqi crude, since the beginning of current phase XII of the programme on 30 May 2002, have amounted to 84 million barrels out of the 331million barrels approved by the United Nations oil overseers under 148 oil purchase contracts. The estimated revenue generated so far in this phase, which ends on 25 November 2002, is €2.07 billion or $2 billion.

Due to a cumulative revenue shortfall since phase VIII of the programme, 1,116 approved humanitarian supply contracts, worth about $2.22 billion, remain without available funds. The sectors affected by the revenue shortfall are: electricity with $392 million; agriculture with $340 million; housing with $297 million; food handling with $296 million; water and sanitation with $271 million; health with $ 223 million; food with $171 million; education with $125 million, and; telecommunications and transportation with $109 million.

Since the beginning of the programme on 10 December 1996, Iraq has exported some 3.1 billion barrels of oil at an estimated $38.6 billion and € 19.6 ($ 17.58 billion) in revenue. With 72 percent of the oil proceeds allocated to the humanitarian programme, some $36.6 billion worth of contracts for the purchase of various humanitarian supplies and equipment have been approved by the 661 committee and by OIP, including about $3.3 billion worth of oil industry equipment. So far, about $24.1 billion worth of supplies and equipment have been delivered to Iraq, including $1.5 billion worth oil industry equipment, while another $9.8 billion worth of supplies and equipment, for which funds have been available, are in the production and delivery pipeline, including $1.8 billion worth of oil industry equipment.

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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