Header Logo

   

2 March 1999

Oil-for-Food Background Information

 

Concern at interruption in the flow of Iraqi oil for export

The Executive Director of the United Nations Office of the Iraq Programme, Benon V. Sevan is deeply concerned at recent incidents which have resulted in an interruption in the flow of Iraqi oil for export and says any extended stoppage will aggravate further the lack of funding available for humanitarian supplies under the oil for food programme.

Mr Sevan said today: "Given the depressed price of oil and the state of Iraq's oil industry, there's currently a $900 million gap between the revenue expected and what's needed to fund the humanitarian programme. This shortfall is already cutting deeply into the allocations for water and sanitation, agriculture and education."

The Kirkuk to Ceyhan pipeline was shut down on Sunday evening following damage to a communications repeater station about 125 kilometres from the Zakho metering station on the border with Turkey. The prospects for an early resumption of oil flows faded today with reports that a second communications facility has also been damaged. The second facility is at Ain Zala, 40 kilometres from Zakho.

The UN's independent inspection agents, monitoring the export of Iraqi oil, yesterday visited repeater station 6 and reported on the extent of the damage which Iraqi officials said had been caused by an airstrike. A report is also expected on the damage to the Ain Zala facility.

The pipeline from Kirkuk to Ceyhan carries half the oil Iraq is permitted to export under the terms of Security Council resolutions establishing the oil for food programme. Since exports began under Phase V, which runs from 26 November 1998 to 24 May 1999, Iraq has been exporting an average of 2 million barrels a day.

In the week to 26 February, Iraq exported 15 million barrels of oil with an estimated value of $136 million. The revenue generated since the beginning of Phase V is estimated at $1475 million from the export of 171 million barrels giving an average value of $8.62 per barrel.

Another two contracts for the sale of oil have been approved: one to a French company for 1.8 million barrels of Kirkuk crude for Europe; the second to a Russian company for five million barrels of Basrah Light for the USA and two million barrels of Kirkuk crdue for Europe.

As at 26 February, the oil overseers and the Security Council's 661 Committee had approved 84 contracts for the export of Iraqi oil with a total volume of 316.3 million barrels (165.8m Basrah Light, 150.5m Kirkuk).

During the week, the 661 Committee approved 15 contracts for oil industry spare parts and equipment worth $18,937,620. Seven of these had earlier been placed on hold. The OIP has now received 522 contracts worth $278.8million. Of these, 382 contracts worth $227,971,040 have been approved and 93 contracts worth $27.5 million remain on hold. Two shipments of oil spare parts arrived in the past week - one for $145,727 and the other for $21,170 worth of pipeline equipment and spares.

Humanitarian supplies continued to arrive at the three land entry points and at Iraq's port of Umm Qasr. In addition to food and medicine, arrivals included: examination copybooks, chlorine gas, tractors, wheel chairs, tyres, trucks, diesel generators, paper for offset printing, spare parts for water treatment plants and spares for power plants.

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