WATCHING THE WORLD IRAQ EYES EXPORT RESUMPTION

with Roger Vielvoye from London In the wake of Iraq's acceptance of safe havens for the Kurds and presentation of its chemical, biological, and nuclear weapons list has come the expected request to the United Nations Security Council for an easing of the embargo on Iraqi oil exports. The U.N. was asked to exercise an option under Security Council Resolution 687 to allow limited oil exports to finance imports of food and medicine for humanitarian purposes. Baghdad wants to export $942.5

April 29, 1991

3 min read

In the wake of Iraq's acceptance of safe havens for the Kurds and presentation of its chemical, biological, and nuclear weapons list has come the expected request to the United Nations Security Council for an easing of the embargo on Iraqi oil exports.

The U.N. was asked to exercise an option under Security Council Resolution 687 to allow limited oil exports to finance imports of food and medicine for humanitarian purposes. Baghdad wants to export $942.5 million of crude oil during 4 months, which would require foreign sales of at least 500,000 b/d.

PLENTY OF OIL

At first sight, plenty of oil could be made available to buyers within days of a U.N. agreement. But finding customers without the aid of a sophisticated communications system could be a problem even when political accord has been reached with Iraq's neighbors who control vital pipeline outlets.

About 20 million bbl of crude are estimated to be available through the IPSA pipeline system from southern Iraqi oil fields through Saudi Arabia to Iraq's dedicated export and storage terminal near Yanbu on the Red Sea coast.

When the U.N. embargo finally put a stop to Iraqi exports, storage tanks at Yanbu were brim full with about 10 million bbl of oil.

Another 10 million bbl of crude are lying in the pipeline.

The line was not seriously damaged in the allied military campaign. However, the first two pump stations on the line--the first near Zubair in southern Iraq and the second about 90 miles down the route on the border between Iraq and Saudi Arabia--are damaged.

When allied forces complete the withdrawal from southern Iraq, Iraqi engineers will be able to undertake a more detailed survey of the damage.

Iraq's biggest problem in releasing the IPSA stocks could be political rather than military. In the war of words that preceded the allied attack, Baghdad tore up all its agreement with Saudi Arabia, including the pact under which Saudi Aramco operated the pipeline on behalf of Iraq.

Under an agreement signed during the Iran/Iraq war, when the Saudis were willing to prop up Iraq's ailing economy, Saudi Aramco Oil Co. is paid to operate the line. But the Middle East Economic Survey reports no transit fees are paid. So it is debatable whether the Saudis will allow such an agreement to continue.

Exports through Turkey may be less of a problem. There are about 10 million bbl of oil in the pipeline through Turkey to the Mediterranean port of Ceyhan. Iraqis are in control of all the pipeline pumping facilities in northern Iraq and could resume production once the Turks give the green light.