Header Logo


5 November 2002
Oil-for-Food Background Information


Weekly Update

(26 October – 1 November 2002)

On 1 November 2002, a United Nations team of five independent inspection agents arrived at Ar’ar crossing point at the border of Iraq with Saudi Arabia, to finalise preparations for the establishment of a UN inspection site at this border crossing point. The inspection site at Ar’ar, which will become fully operational on 8 November 2002, will be the fifth authorized border crossing for the import of goods under the oil-for-food programme. United Nations independent inspection agents at authorized points of entry confirm and authenticate the delivery of humanitarian supplies to Iraq under the oil-for-food programme only. The other four authorized entry points are: Trebil, at the border of Iraq and Jordan; Al-Walid, at the border of Iraq and Syria; Zakho, on the border of Iraq with Turkey and; Port of Umm Qasr in the Gulf.

On 28 October 2002, the Security Council’s 661 sanctions committee approved a list of about 6,000 humanitarian supply items. Contracts for the supply of these items will no longer require a review by the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA) or the 661 Committee, but instead will be “fast-tracked” for approval by the Office of the Iraq Programme (OIP). The list, developed jointly by OIP, UNMOVIC and IAEA under the new set of procedures of Security Council resolution 1409 (2002), includes all food items, basic medicines and medical supplies, furniture, printing paper, teaching and educational supplies, agricultural seeds and fertilizers and basic construction materials. 

Averaging about 2.76 million barrels per day, Iraqi oil exports under the programme jumped from the previous week’s low of 5.1 million barrels to 19.3 million barrels in the week ending 1 November. Completed in 14 shipments – eight from Mina-al-Bakr loading terminal with 11.9 million barrels of oil and six from Ceyhan with 7.4 million barrels, the week’s exports netted an estimated €440 million (euros) or $430 million, at current prices and rate of exchange. The average price of Iraqi crude oil was approximately €22.65 or $22.30 per barrel.

Since the start of current phase XII of the programme on 30 May 2002, buyers of Iraqi crude oil have imported almost 179 million barrels out of 475 million barrels of oil approved by the United Nations oil overseers under 192 oil purchase contracts, including one new contract approved during the week in review. Estimated revenue from these exports stands at €4.32 billion or $4.31 billion. Phase XII ends on 25 November 2002. The Government of Iraq has budgeted the humanitarian programme for the current phase at over $5 billion. With 72 per cent of the total oil revenue being allocated to the humanitarian programme, as required under Security Council resolution 1330 (2000), Iraq would need to export about $7 billion worth of oil during the current phase in order to meet its budgetary target.

Iraq has exported some 3.2 billion barrels of oil, since the beginning of the programme on 10 December 1996, at an estimated $38.6 billion and €21.9 billion ($19.9 billion) in revenue. Some $39 billion worth of contracts have been approved by the 661 Committee and OIP for the purchase of various humanitarian supplies and equipment, including about $3.5 billion worth of oil industry spare parts and equipment. To date, about $24.9 billion worth of supplies and equipment have been delivered to Iraq, including $1.5 billion worth oil spare parts and equipment, while another $10.1 billion worth of supplies and equipment, for which funds have been set aside, are in the production and delivery pipeline, including $1.8 billion worth of oil industry equipment.  

Owing to a revenue shortfall from earlier phases of the programme, currently 1,552 approved humanitarian supply contracts, worth about $2.99 billion, are without funds and, therefore, cannot be delivered to Iraq. The sectors affected by the revenue shortfall are: electricity with $560 million; agriculture with $539 million; food handling with $507 million; health with $309 million; housing with $308 million; water and sanitation with $286 million; telecommunications and transportation with $241 million; education with $235 million.

Out of $5.93 billion worth of humanitarian supply contracts processed by the United Nations Secretariat under the new set of procedures of Security Council resolution 1409 (2002), contracts worth around $2.42 billion (40.7 per cent) have been approved by OIP after having been assessed by UNMOVIC/IAEA as not containing any Goods Review List (GRL) items, including a number of contracts previously placed on hold by the 661 Committee. UNMOVIC/IAEA have categorized $3.22 billion worth of contracts (54.3 per cent) as “GRL non-compliant”, requiring additional technical information from suppliers to enable final assessment. So far, $323 million worth of contracts (5.4 per cent) have been found by UNMOVIC/IAEA to contain GRL items, of which $2.8 million worth have been approved and $19.3 million worth rejected by the 661 Committee. 

OIP Home Page


Back to Top

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