25 March 2003

Weekly Update 

15-21 March 2003

Iraqi Oil Exports Plunge With Onset of  War

Iraqi oil exports under the Oil-for-Food Programme fell during the week of 15-21 March to just 25 per cent of the previous week’s level. Exports and revenues reached 3.1 million barrels and $63 million respectively, compared with 12.7 million and $340 million for the week of 8-14 March. The daily export average was 443,000 barrels compared with 1.8 million barrels the previous week.  

On 17 March, the Secretary-General announced the temporary withdrawal of all humanitarian personnel from Iraq because he was no longer in a position to guarantee their security and safety. Although oil continued to flow through the oil pipeline from northern Iraq to the Turkish Mediterranean port of Ceyhan, the UN’s independent oil overseers were withdrawn from the Iraqi oil platform at Mina al-Bakr in the south. These are the only outlets for Iraqi oil exports allowed under the Oil-for-Food Programme.  

There were three loadings from the authorized terminals during the week in review: one from Mina al-Bakr (2 million barrels) and two from Ceyhan (1.1 million barrels). The last recorded loading at Ceyhan was a shipment of about 625,000 barrels on 20 March. No other vessels are currently expected at Ceyhan, although storage tanks at the terminal are near capacity.

Total exports for the week (3.1 million barrels) generated estimated revenue of €60 million (euros) or $63 million, at current prices and rate of exchange. The average price of Iraqi crude for the reporting period was approximately €20.80 or $22 per barrel.

UN oil overseers approved one new oil purchase contract during the week. The current total of approved contracts is 141, covering 380.4 million barrels of oil. Estimated revenue generated from the beginning of phase Xlll (5 December 2002 – 3 June 2003) at current prices and rate of exchange, stands at $4.4 billion for 169.6 million barrels of oil.

Contract Approvals

Of a total 6,314 contracts for humanitarian supplies worth $11.9 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 5,039 contracts worth about $8.2 billion (68.2 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 1,146 contracts worth about $2.3 billion that had previously been on hold by the Security Council’s 661 Sanctions Committee. These have now been reviewed by UNMOVIC/IAEA under para 18 of the procedures of resolution 1409 (2002).

Goods Review List

Of the total contracts, 987 worth $3 billion (25.2 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, 332 contracts worth over $1.2 billion have been found by UNMOVIC/IAEA to contain one or more GRL items. Of these, 179 contracts worth $239 million have been reviewed by the Security Council’s 661 Sanctions Committee, of which, 34 contracts worth $16.4 million have been approved. Fifty one contracts worth $56.9 million, have lapsed because the suppliers have not submitted a petition within 30 working days of the denial. Thirty of the 332 contracts, worth $60.6 million, have been rejected because of a “high risk of diversion to military use.” An additional 50 contracts worth $100.8 million have been denied approval by the 661 Committee, pending appeal. 

Contracts containing GRL items represent 10 per cent, in terms of value, of all applications processed by the UN experts so far.

Humanitarian revenue shortfall

Due to a cumulative oil revenue shortfall dating from phase VIII (9 June - 5 December 2000) through phase Xll of the programme, 2,755 UN-approved humanitarian supply contracts worth some $5.6 billion, currently lack funds. The sectors affected by the revenue shortfall are: food handling ($986 million); agriculture ($859 million); housing ($830 million); electricity ($563 million); telecommunications and transportation ($540 million); water and sanitation ($514 million); food ($426 million); health ($410 million); education ($408 million).

Oil-for-Food Programme

The Oil-for-Food programme was established by the Security Council on 14 April 1995. Some 3.4 billion barrels of Iraqi oil valued at about $64 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 since December 2000. The balance goes to: Gulf War reparations through a Compensation Fund (25 per cent since December 2000); 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 more than $44 billion worth of humanitarian supplies, including $3.8 billion worth of oil spare parts, have been approved by the 661 Sanctions Committee and the Office of the Iraq Programme. Of this amount, almost $27 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 $10.1 billion worth of supplies are currently in the production and delivery pipeline.