Iraqi oil officials said on October 31st that state oil marketer SOMO will submit its new Euro price mechanism along with its November crude contract prices to the U.N. soon, as Banque Nationale de Paris (BNP) announced that it will open an escrow account in Euros on November 6th as requested by Baghdad.
The news comes after the U.N. sanctions committee late on October 30th approved Iraq’s proposal to conduct all oil transactions in Euros rather than in dollars and to establish a new escrow account in Euros at BNP in New York to be used for the deposits of proceeds from the oil-for-food program.
Iraq had threatened to halt its oil exports if its demand for all transactions to be conducted in Euros from November 1st was not met, but agreed on October 30th to extend the deadline to November 7th in order to give the U.N. more time to make the switch.
A diplomat on the U.N. sanctions committee said that the committee members hope the necessary arrangements can be made in one week, but are unsure exactly how long it will take to implement the changes.
The diplomat also indicated that the U.N. is to report back to the committee in three months to detail the impact of the currency switch on the humanitarian program.
A ten-page report presented to the committee on October 26th had found that the cost to Iraq of converting from dollars to Euros would be at least $270 million a year. Iraq continues to dispute the findings, saying that the matter is “not so complicated.”