Iraq has secured an independent source of oil revenue outside UN control and its exports have returned to normal after three months of turmoil, the Middle East Economic Survey, MEES reported Monday, April 9.
Exports last month under the United Nations oil-for-food scheme averaged two million barrels per day (bpd) with production totaling 2.6 million bpd, including deliveries to Iraqi refineries and cross-border trade with Jordan, Turkey, Syria and the Gulf, the industry newsletter said. Iraq's average output in 1999 and 2000 was about 2.5 million bpd.
The specialist weekly said another full loading program for Iraqi crude was expected in April. The United Nations resisted efforts by Iraq to enjoy oil revenue outside the UN's control by levying surcharges.
But MEES noted that the first "breakthrough" on the way to acceptance of Iraqi crude exports with the surcharges came as far back as December 28 when ExxonMobil agreed to buy through secondary lifters.
The move was eventually followed by other major companies and all Iraq's regular customers have now resumed purchases. "Moreover the main market for Iraqi crude is the US, where over 90 percent of exports were sold between December and February," MEES said.
"While the UN estimates that by mid-February Iraq had lost over $2.2 billion because of the decline in exports caused by the imposition of the surcharge, MEES soundings indicate that ... the Iraqi authorities accomplished their main objective, which is to secure an independent source of oil revenue outside UN control."
As a result of international sanctions imposed on Iraq for invading Kuwait in 1990, the United Nations has controlled crude exports by Baghdad under the oil-for-food plan set up in 1996.
MEES explained that to escape the UN straitjacket, Iraq had found more than 100 companies — many virtually unknown to the oil industry — which were prepared to do deals openly but without any evidence they were paying the 25-30 cent surcharge outside UN accounts.
Iraq has made continuous changes to price formulae to take into account the surcharge and premiums to middlemen while keeping prices competitive with other crudes, MEES noted. — (AFP, Nicosia)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)