By an OGJ correspondent
NICOSIA, Feb. 24 -- The Iraqi government has bypassed a United Nations embargo on unauthorized oil exports and apparently has smuggled large amounts of crude by diverting ships away from the approved Mina al-Bakr export terminal to the nearby, unauthorized terminal at Khor al-Amaya.
At least one shipment of 1 million bbl from the port has already been confirmed, and reports suggest that six more tankers with combined cargoes totaling 9 million bbl were chartered last week to load from the port.
Even at discounted prices, the crude would be worth about $250 million on the international market.
The key to the diversion apparently lies in Baghdad's exploitation of genuine UN export certificates to serve as cover for the illicit cargoes loaded at Khor al-Amaya.
UN rules flouted
Iraq is entitled to export as much oil as it can pump under the UN's oil-for-aid program. But all Iraqi oil must be exported from one of two ports authorized by the UN Security Council: Mina al-Bakr on the Persian Gulf or Ceyhan, Turkey's port on the Mediterranean.
Exports from those two ports are monitored by UN officials to ensure that all revenues go into the oil-for-aid program and not directly to the Iraqi government.
Under terms of the oil-for-aid program, all exports from Iraq require a certificate of authenticity from the UN.
On presentation of this certificate to officials of the Maritime Interdiction Operation, which is enforcing the UN embargo, ships are allowed to pass into and out of Iraqi waters.
An MIO official told OGJ that "no ship" can enter or leave Iraqi waters without presentation of a valid certificate authorized by the UN.
The Iraqis appear to be abusing the certification process, as ships with certificates are being diverted from Mina al-Bakr, where loadings are monitored by UN officials, to Khor al-Amaya, which has no UN inspection team.
In the absence of UN monitoring, loadings from Khor al-Amaya can generate revenues that completely bypass the UN oil-for-aid program and go straight into Baghdad's coffers.
Illegal shipment confirmed
The one confirmed shipment is the 1 million bbl capacity Argosea tanker, whose owners, Tsakos Shipping & Trading SA, Athens, said loaded at Khor al-Amaya on Feb. 18.
"She went into Mina (al-Bakr), and pilots instructed the tanker to go to the other terminal (Khor al-Amaya) to load," said Tsakos General Manager Harry Hajimichael.
"The vessel was instructed by the charterers to load from Iraq, and we were not aware of a difference between the two terminals," he said, adding that the vessel was on long-term charter to an unnamed but "reputable" company.
"She (Argosea) informed the UN checkpoint she was going into Mina al-Bakr, and then when the authorities instructed the tanker to go to the other terminal (Khor al-Amaya) again, she informed the UN checkpoint and was given the go-ahead.
"There was never indication of any problem," Hajimichael said.
He said the company had so far not been contacted at all by the UN, but "if there is something wrong, it is about time they did," he added.
London based shipbroker Petrian Shipbrokers, which was involved in fixing the ship, also said the tanker had checked with the UN before going to the revised port and was given clearance.
"It is not as if anything was done surreptitiously or under cover of darkness," broker Preston Carter told Lloyd's List, the London-based shipping newspaper.
The Argosea was on a time charter, and Petrian had not been involved in fixing any ships directly for loading at Khor al-Amaya, Carter said.
Although oil from Khor al-Amaya would have to sail past US Navy interdiction forces in the Persian Gulf, a spokesman for Navy command told OGJ that he was unable to confirm whether the Argosea actually had been in contact with MIO forces or inspected by them.
Confusion played upon
Confusion over the two ports and their legal status is hardly surprising, and appears to have been played on by the Baghdad regime.
Under the government of Saddam Hussein, Iraq has long been planning to expand the combined capacity of Mina al-Bakr and Khor Al Amaya terminals to at least 3.2 million b/d.
A report compiled by Dutch monitors Saybolt for the UN in 2000 warned that the facilities at Mina al-Bakr were in poor condition, and it noted that work was under way to repair the Khor al-Amaya terminal as a backup.
"Two berths at the Khor al-Amaya loading platform are under repair as an alternative to Mina al-Bakr, should technical problems occur," the Saybolt report said.
"Given the condition of the Mina al-Bakr loading platform, an alternative is strongly recommended," the monitors added.
That was echoed by UN Secretary-General Kofi Annan in March 2000 when he reported to the UN Security Council on the oil-for-aid program.
"There has been no improvement in the condition of the Mina al-Bakr loading platform," Annan said at that time, adding that "the safety and operational capabilities of this facility remain a major concern."
Three months later, in June 2000, Rafid Al-Dibuni, head of Iraqi state-owned Southern Oil Co., told Iraq's Al-Ilam weekly newspaper that repairs on the terminal were nearly complete and that exports could begin under UN auspices.
"We are about to finish the rehabilitation of Khor Al-Amaya. . .and exports from the terminal under the oil-for-food deal will start soon at a capacity of 700,000 b/d," Al-Dibuni said.