WATCHING THE WORLD STALEMATE ON RESOLUTION 706

With Roger Vielvoye from London Iraq's list of excuses for failing to endorse United Nations conditions for resumption of much needed crude oil exports grows ever longer. Oil Minister Usama al-Hiti said Iraq rejected U.N. Resolution 706 on practical grounds because the arrangements it lays down for oil sales are so complicated the whole international marketing operation would be very difficult. He pointed out that the U.N. has never been an oil trader, and he saw no reason it should enter

Nov. 18, 1991

3 min read

Iraq's list of excuses for failing to endorse United Nations conditions for resumption of much needed crude oil exports grows ever longer.

Oil Minister Usama al-Hiti said Iraq rejected U.N. Resolution 706 on practical grounds because the arrangements it lays down for oil sales are so complicated the whole international marketing operation would be very difficult. He pointed out that the U.N. has never been an oil trader, and he saw no reason it should enter the business.

INDUSTRY'S ROLE

Simply because it has no experience as an oil trader, the U.N. has turned to the oil industry to run the tight monitoring operation that will be required to ensure that Iraqi crude is sold strictly on terms set forth by the U.N. and that proper contributions are made to the war reparations fund.

U.N. teams, staffed with personnel from Norway's Den norske stats oljeselskap AS and Saga Petroleum AS are in place and ready to handle the sale of the first export cargo from the Turkish Mediterranean port of Ceyhan.

An informal panel of senior figures from the industry under former Statoil Pres. Arve Johnsen also is available to advise the U.N. secretary general. British Petroleum Co. plc Chairman Robert Horton and Loik le Floch-Prigent, chairman of Ste. Nationale Elf Aquitaine, agreed to served on the panel if needed.

The Turkish government, with an eye on the huge transit bonus it will extract from first oil movements through the pipeline to Ceyhan, has confirmed in an official statement that the system is ready to start pumping Iraqi crude.

The statement was needed to quash rumors that problems still existed on the section of the pipeline through Turkey, requiring further remedial work that could take several months.

All that is needed now is acceptance of Resolution 706 by Saddam Hussein. And despite the crying need of the people of Iraq for humanitarian purchases that will come from the resumption of oil exports, this acceptance is not forthcoming.

There is no logical explanation for the Iraqi leader's intransigence, particularly because it is clear the U.N. is in no mood to make concessions.

Al-Hiti gave some indication of the paranoid thinking that prevails in Baghdad-but no real explanation of Saddam's behavior-in remarks to Reuters news agency. He claimed the U.N. is using the sanctions system to reward the allies, notably Saudi Arabia, by giving them the opportunity to export more crude.

WHAT THE FIGURES SHOW

Latest figures on production by members of the Organization of Petroleum Exporting Countries don't bear out Al-Hiti's claim. Saudi Arabian production has been steady at about 8.4 million b/d. Production by OPEC members hit a high for the year of 23.8 million b/d in October.

The main beneficiaries of the fourth quarter surge in demand for OPEC crude and the accompanying higher prices have been the United Arab Emirates, Iran, Venezuela, and Kuwait.

Having missed the opportunity of resuming exports in a rising market for OPEC oil, Iraq should not be worrying about who is benefiting from its absence. A much greater cause for concern should be the effect of Iraqi exports resuming in a falling market, particularly in second quarter 1992.