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10 December 2002
Oil-for-Food Background Information


Weekly Update

(30 November - 6 December 2002)

On 4 December, the Security Council voted a 180-day extension of the oil-for-food programme through 3 June 2003.This is the 13th phase of the programme since its implementation in December 1996.

The programme was established by the Security Council on 14 April 1995 to ease a humanitarian crisis related to the comprehensive sanctions imposed on Iraq.

Since then, some 3.26 billion barrels of Iraqi oil valued at about $59.7 billion have been exported under the programme. Of this amount, 72 per cent of the total (since December 2000) has been allocated towards humanitarian needs nationwide. The balance goes to: Gulf War reparations through a Compensation Fund (25 per cent); UN administrative and operational costs for the programme (2.2 per cent) and costs for the weapons inspection programme (0.8 per cent).

To date, some $25.6 billion worth of humanitarian supplies and equipment have been delivered to Iraq under the oil-for-food programme, including $1.6 billion worth of oil industry spare parts and equipment. An additional $10.5 billion worth of supplies are currently in the production and delivery pipeline.

Oil exports down

Iraqi oil exports under the oil-for-food programme totalled 10.8 million barrels for the week ending 6 December – down slightly from the previous week’s 11.9 million barrels. Exports for the week spanned phase Xll  (8.8 million) and phase Xlll (2 million).

Oil exports from Iraq under the programme have fluctuated for a variety of reasons. Among them: Iraq’s periodic suspension of oil exports under the programme; the absence of agreement between Iraq and the UN Sanctions Committee on oil pricing; declining technical capacity to produce oil; and the concerns of traders about the reliability of Iraqi supplies, including possible disruptions as a consequence of current political developments.

Loadings for the week (30 November-6 December) averaged more than 1.5 million barrels per day. There were nine loadings from the authorized terminals: three from Mina al-Bakr (5.57 million barrels) and six from Ceyhan in Turkey (5.26 Million Barrels). Exports for the week generated estimated revenue of €240 million (euros) or $238 million, at current prices and rates of exchange. The average price of Iraqi crude was approximately €22.05 or $22.00 per barrel.

At the request of contracting parties, 25 approved oil purchase contracts have been transferred from phase Xll to the current phase Xlll of the programme.

$3.2 billion Humanitarian Revenue Shortfall

During phase Xll ending 4 December, buyers of Iraqi oil took delivery of 234.2 million barrels of oil valued at about $5.49 billion out of Iraq. However, Iraq would have needed to export about $7 billion worth of oil to have met its humanitarian budget of over $5 billion as outlined in the distribution plan of the Iraqi Government in phase Xll.

With a cumulative oil revenue shortfall dating from phase VIII of the programme (9 June - 5 December 2000), 1,692 UN-approved  humanitarian supply contracts worth some $3.2 billion, currently lack funds. The sectors affected by the revenue shortfall are: agriculture ($587 million); food handling ($469 million); electricity ($458 million); health ($375 million); water and sanitation ($381 million); housing ($351 million); education ($293 million); telecommunications and transportation ($252 million).

Contract Approvals

Of a total 4,189 contracts for humanitarian supplies worth about $7.97 billion processed by the United Nations Secretariat under the Goods Review List (GRL) and new procedures under Security Council resolution 1409 (2002), the Office of the Iraq Programme has approved 2,849 contracts worth about $3.8 billion (48 per cent in terms of value) after assessment by the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA) that they do not contain items on the Goods Review List.

Approvals include 909 contracts worth more than $1.4 billion that had previously been on hold by the 661 Sanctions Committee. These have now been reviewed by UNMOVIC/IAEA under para 18 of the procedures of resolution 1409 (2002)

Of the total contracts, 1,193 worth about $3.6 billion (45.7 per cent in terms of value) are on GRL Non Compliance status. UNMOVIC and IAEA will require additional technical information from suppliers to enable final assessments.

So far, 161 contracts worth $532.6 million (or 6.5 per cent of the total value) have been found by UNMOVIC/IAEA to contain one or more GRL items. Of these, 72 contracts worth $107.3 million have been reviewed by the 661 Sanctions Committee. Of these, 14 contracts worth $4.17 million have been approved. Five have lapsed because the suppliers have not submitted a petition within 10 working days of the denial.  Forty nine of the 72 contracts, worth $90.37 million, have been rejected because of a “high risk of diversion to military use.”

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Produced for media and public information – not an official United Nations Document
For further information please contact Hasmik Egian Tel: 212 963 4341 email: egian@un.org or Ian Steele Tel: 212 963 1646 email: steelei@un.org