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24 September 2002
Oil-for-Food Background Information


Weekly Update

(14 – 20 September 2002)

 Following months of sluggish oil export levels under the United Nations oil-for-food programme, Iraq’s exports were up significantly last week to the tune of 1.9 million barrels per day, totalling 13.3 million barrels.  This was the highest single weekly volume of exports registered since the start of the current phase XII of the programme on 30 May 2002.  Completed through nine shipments, the week’s oil liftings netted an estimated €351 million (euros) or $344 million in revenue, at current prices and rate of exchange.  Of the total shipments, four were from Ceyhan loading terminal, with 4.4 million barrels of oil and five from Mina al-Bakr terminal, with 8.9 million barrels.  The average price of Iraqi crude oil was €26.40 or $25.70 per barrel. 

 There are now 164 approved oil purchase contracts in this phase for 376 million barrels of oil, including seven new contracts approved by the United Nations oil overseers during the week for 16.1 million barrels of oil.  Of the total volume of oil approved for purchase, to date 111.4 million barrels have actually been shipped out of Iraq by the contract-holders, worth approximately €2.77 billion or $2.71 billion. Phase XII ends on 25 November 2002. 

Despite the increase in Iraqi oil exports during the week, the volume of approved contracts for the purchase of humanitarian supplies which are lacking funds from earlier phases as a result of the cumulative revenue shortfall, in fact grew to $2.32 billion, covering 1,291 contracts.  The sectors affected by the revenue shortfall are: food handling with $436 million; agriculture with $400 million; electricity with $395 million; housing with $272 million; water and sanitation with $258 million; health with $256 million; education with $166 million; telecommunications and transportation with $117 million and; food with $18 million.

 Iraq has exported some 3.1 billion barrels of oil for an estimated revenue of $38.6 billion and €20.3 billion ($18.3 billion) since the start of the programme on 10 December 1996.  As of December 2000, the humanitarian programme has been receiving 72 per cent of the total oil revenue, while earlier it had been set at 66 per cent.  To date, almost $37.3 billion worth of contracts for the purchase of various humanitarian supplies and equipment have been approved by the Security Council’s 661 sanctions committee and the Office of the Iraq Programme (OIP), including about $3.4 billion worth of oil industry equipment.  Over $24.6 billion worth of supplies and equipment have reached Iraq, including $1.5 billion worth oil industry equipment, while another $9.4 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. 

With the implementation of the new set of procedures under Security Council resolution 1409 (2002) on 15 July 2002, some $432 million worth of supplies under 412 contracts previously on hold by the 661 Committee, have now been re-assessed as not to contain Goods Review List (GRL) items and, therefore, approved by OIP. At the same time, the United Nations Secretariat experts have sought additional information from suppliers on 183 contracts previously on hold worth $420 million, to enable them to make a final determination.  There remain 1,152 humanitarian supply contracts on hold worth about $3.45 billion, of which 771 contracts worth about $2.91 billion are for humanitarian supplies and 381 contracts worth $532 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.  The second category includes all other contracts on hold which are re-circulated by OIP under the new procedures. Following the re-circulation and re-assessment of these contracts by the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA) in mid-October, it is foreseen that there will no longer be contracts on hold.  These contracts will either be approved or denied within specified timeframes.

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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