The United Nations Security Council committee overseeing the post-Persian Gulf War sanctions against Iraq earlier this month released more contracts under the oil-for-humanitarian aid program than it has placed on hold, reversing a long-standing trend, according to the Office of the Iraq Program.
The total value of contracts placed on hold by the Security Council's sanctions committee fell the week of Apr. 30, both in absolute and relative terms, "after months of gradual increase," OIP said last week.
Those contracts cover goods purchased by Iraq with a portion of its UN-administered oil revenues. Because much of the goods are targeted for rehabilitating Iraq's war-ravaged oil sector, the shift in balance represents another sign of that country's continuing oil sector recovery.
After a brief shutdown last December in another dispute with the Security Council, Iraq's oil exports have rebounded sharply, rising by about 700,000 b/d just since early April. Because of the sanctions, Iraq is not bound by quotas installed by the other 10 members of the Organization of Petroleum Exporting Countries, which this year has already instituted two production quota cuts in order to bolster oil prices.
Contracts released
Removing the hold from 40 contracts-for goods purchased by Baghdad with a portion of its UN-administered oil revenues-worth some $201.4 million, while placing on hold 32 new contracts valued at $107.8 million, "shifted the balance."
OIP noted that a single contract for Iraq's electricity sector, worth $110 million, was among those released, along with a number of deals for irrigation systems, animal vaccines, tug boats, gas turbine equipment, and a wastewater treatment plant.
New contracts related to water treatment and electromechanical equipment, pipes, valves, a television transmitter, medical machines, and a tire-testing machine, were among those put on hold.
Overall, 1,691 contracts worth $3.5 billion are currently on hold, representing 17.1% of the value of all contracts put before the committee, OIP reported. Iraq exported around 14.4 million bbl of oil the week of Apr. 30, earning an estimated 371 million euros at current market prices.
The oil-for-aid program was put in place after sanctions were imposed on Iraq following the Persian Gulf War in order for Baghdad to spend part of its oil revenues on humanitarian aid and equipment for use in its oil sector.
