UN moves to halt unauthorized Iraqi oil shipments

Darius V. Snieckus
OGJ Online

LONDON, Apr. 4�The United Nations acted Tuesday to halt unauthorized Iraqi oil exports.

It will issue forms to tanker personnel charged with oil loading in order to check that cargoes leaving Iraq are headed for "approved" destinations.

Under the plan, UN oil monitors will distribute forms verifying the export's destination with the aim of "prevent(ing) the diversion of Iraqi crude oil to a destination other than that authorized" under the Iraqi oil-for-food program, the UN Office of the Iraq Program said.

According to an OIP report issued Tuesday, Iraq exported 1.8 million b/d of oil last week, earning the country an estimated 284 million euros.

On top of this figure, however, according to Leo Drollas, senior analyst at the London-based Centre for Global Energy Studies, Iraq is "illegally" exporting around 150,000 b/d to Syria, with another 25,000 b/d being smuggled out via the Persian Gulf. A further 100,000 b/d is shipped to Jordan, although this export has the "tacit" approval of the UN.

Drollas noted that such a low-tech system of export verification "will not be easy to police," and is likely to be resisted by oil traders in the region who want the "flexibility" of not having to declare destinations for cargoes of crude oil.

There is also the threat that Iraq will retaliate against the imposition of further UN controls by stopping exports, as it did late last year following a stalemate with the Security Council over the setting of a new pricing formula.

CGES puts Iraq's current production at 2.7 million b/d. At last month's Organization of Petroleum Exporting Countries conference in Vienna, Iraq's Minister of Oil, Amer Mohammed Rasheed, said his country aims to ramp up its output to 3 million b/d, of which it plans to export 2.4 million b/d, this month.

The OIP report also highlighted a rise in the number of contracts for humanitarian relief supplies being placed on hold by the UN Security Council so-called 661 committee, which monitors the sanctions against Baghdad. Over 1,600 contracts valued at nearly $3.44 billion are now suspended, according to the OIP, with committee members often citing the "lack of technical specifications and potential dual use" as justification.

Last month, in a report calling for the depoliticization of the oil-for-food scheme in order "to alleviate the continued suffering of the Iraqi people," UN Sec. Gen. Kofi Annan questioned the number of holds being placed on contracts for humanitarian goods by the Security Council.

"It is regrettable that it has not yet been possible for the committee to start a fresh round of technical meetings to review the holds placed on applications in each sector," Annan said in his report.

The oil-for-food program, under which Baghdad can buy relief supplies using a portion of its oil revenues, was begun in late 1996 as part of an initiative aimed at easing aims the impact of UN sanctions imposed on the country in 1990 following the Gulf War.

Contact Darius V. Snieckus at dsnieckus@ogjonline.com

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