Iraq finds oil clients after lowering surcharge
Sanctions-hit Iraq has found customers for its oil exports after lowering a surcharge which circumvents UN control of its revenues, the Middle East Economic Survey (MEES) reported Monday.
The Cyprus-based industry newsletter said the Iraqi government decided on January 18 to cut the surcharge from a flat 40 cents a barrel to between 25 and 30 cents, retroactive to December 1.
"Major consuming countries are turning a blind eye to Iraq's efforts to impose the surcharge, perhaps because Iraqi oil supplies are needed in order to help bring world oil prices down," it said.
"And the revenue generated by the surcharge is small compared to that from cross-border oil trade with Turkey, Jordan, Syria and the Gulf," all outside a UN oil-for-food programme, said the weekly.
MEES added that US and British oil majors such as ExxonMobil, Texaco and BP, whose countries take the hardest line on implementing the sanctions regime on Iraq, had been purchasing Iraqi oil through third parties, often small companies.
Last week, the United Nations announced that Iraqi crude exports had started to return to normal after a seven-week slump caused by a dispute over pricing and the Iraqi surcharges.
Iraq suspended oil exports on December 1 after the United Nations rejected its proposed pricing formula for the month. Sales resumed on December 13, but at a slow rate.
UN officials blamed the dispute on a bid by Iraq to charge less than the fair market value for its oil, to offset a surcharge originally set at 50 cents a barrel which it wanted customers to pay, in breach of sanctions.
In January, exports recovered to around 1.17 million barrels per day (bpd), compared to 600,000 bpd the previous month but still down on the normal rate of 2.25 million bpd, MEES said.
Iraq has been under embargo since its 1990 invasion of Kuwait but is authorized to export crude -- with the revenues under UN control -- to finance imports of humanitarian supplies.
A British newspaper, The Guardian, reported Friday that the United Nations acknowledged it could not penalize oil companies which made illegal payments to Baghdad.
"If there is a violation -- if it's among the oil buyers -- it's up to their governments to take action," a UN official told the paper.
"Given the widespread belief that the sanctions are crumbling, few governments will be eager to prosecute, so the companies will probably get away with paying the surcharge, industry analysts believe," The Guardian reported.—AFP.
©--Agence France Agence 2001.
© 2001 Mena Report (www.menareport.com)