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17 December 2002
Oil-for-Food Background Information


Weekly Update

United Nations and Iraq Extend Oil-for-Food Memorandum of Understanding: Distribution Plan Expected Soon 

The United Nations and the Government of the Republic of Iraq agreed on 11 December to extend the Memorandum of Understanding (MOU) of 20 May 1996 for the oil-for-food programme for an additional 180 days through 3 June 2003 (phase Xlll). The MOU established the terms of implementation of the oil-for-food programme under resolution 986 (14 April 1995). The Government is expected to submit a distribution plan for phase Xlll for the Secretary General’s approval shortly.

Among other developments for the week 7-13 December: The governments of the Republic of Iraq and the Islamic Republic of Iran notified the Office of the Iraq Programme of an agreement to open a border entry point at Khusravi/Mondhariya, to facilitate bilateral trade under the oil-for-food programme. The newly designated entry point is in the Iraqi Governorate of Diyala northeast of Baghdad. It will be the sixth oil-for-food entry point. Other crossings are located at: Ar’ar between Saudi Arabia and Iraq; Zakho near the Turkish border; Trebil bordering Jordan; Al-Waleed bordering Syria, and the Iraqi Port of Umm Qasr.

Final figures for phase Xll

During phase XII (30 May- 4 December 2002) there were 181 loadings of Iraqi crude under the oil-for-food programme (84 from Mina-al-Bakr and 97 from Ceyhan) totalling 232.7 millions barrels (131.1 million barrels from Mina-al-Bakr and 101.6 million barrels from Ceyhan). The estimated value of completed loadings at the current rate of exchange was $5.64 billion. The destinations for Iraqi crude for the phase were: Europe 44 per cent; the Americas 39 per cent; the Far East 17 per cent.

Loadings for phase Xlll

There were three loadings for the week (7-13 December) from the authorized terminals: two from Mina al-Bakr (3.1 million barrels) and one from Ceyhan in Turkey (0.6 million barrels). Total exports for the week (3.7 million barrels) generated estimated revenue of €82 million (euros) or $84 million, at current prices and rates of exchange.

Bad weather conditions at Mina al-Bakr and uncertainties surrounding the renewal of the oil-for-food programme had a negative impact on the amount of crude oil loaded during the current reporting period (7-13 December).

The average price of Iraqi crude for the reporting period was approximately €22.60 or $22.90 per barrel.

Eighteen new contracts were approved for the week (7-13 December). Three additional approved contracts were carried over from phase Xll to phase Xlll bringing the current total to 46, covering 137 million barrels of oil. Estimated revenue generated from the beginning of phase Xlll , at the current rate of exchange, stands at $137 million.

Contract Approvals

Of a total 4,306 contracts for humanitarian supplies worth about $8.2 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 2,972 contracts worth about $4 billion (48.5 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 928 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, 1,176 worth about $3.7 billion (45.3 per cent in terms of value) are on GRL Non Compliant status. UNMOVIC and IAEA will require additional technical information from suppliers to enable final assessments.

So far, 171 contracts worth $553.3 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, 78 contracts worth $112 million have been reviewed by the 661 Sanctions Committee, of which, 16 contracts worth $5.3 million have been approved. Six have lapsed because the suppliers have not submitted a petition within 10 working days of the denial.  Fifty two of the 78 contracts, worth $79.55 million, have been rejected because of a “high risk of diversion to military use.”

Revenue shortfall

During phase Xll ending 4 December, buyers of Iraqi oil took delivery of 232.7 million barrels of oil valued at about $5.6 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.

Due to a cumulative oil revenue shortfall dating from phase VIII (9 June - 5 December 2000) through phase Xll of the programme, 2,145 UN-approved  humanitarian supply contracts worth some $4 billion, currently lack funds. The sectors affected by the revenue shortfall are: agriculture ($694 million); food handling ($518 million); food ($491 million); electricity ($484 million); health ($460 million); water and sanitation ($398 million); housing ($382 million); education ($306 million); telecommunications and transportation ($332 million).


The oil-for-food programme was established by the Security Council on 14 April 1995. Some 3.26 billion barrels of Iraqi oil valued at almost $60 billion have been exported under the programme since December 1996. Of this amount, 72 per cent of the total 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).

Since December 1996 about $40.3 billion worth of humanitarian supplies, including $3.6 billion worth of oil spare parts, have been approved by the 661 Sanctions Committee and the Office of the Iraq Programme. Of this amount, 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.


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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