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By Peg Mackey
Reuters AlertNet
http://www.alertnet.org/
Friday May 23, 2003

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AMMAN, May 23 (Reuters) - Iraq is aiming to resume oil exports quickly after the United Nations agreed on Thursday to lift sanctions, a senior Iraqi oil official said on Friday.

Fadhel Othman, number two on the U.S.-appointed advisory panel helping run Iraq's oil industry, said state oil marketing organisation SOMO now would start discussing new export contracts.

"SOMO is doing its best to restart exports as soon as possible," Othman told Reuters.

The timetable for crude sales will depend on SOMO's ability to communicate with customers from its damaged headquarters in Baghdad.

"How can we sign a contract, fix a price and get a vessel approved when we can barely get through to SOMO?," said one trader seeking to negotiate a contract.

Under Thursday's United Nations resolution, U.S. and British occupation forces are offered protection from lawsuits in selling oil until an internationally recognised goverment is in place.

Long-term oilfield development contracts will be held in abeyance for a permanent government, something U.S. Secretary of State Colin Powell said on Thursday could take a year or two.

SALES FROM STORAGE

Iraq's first exports since mid-March will come from crude held in storage at Ceyhan, Turkey, the outlet for pipeline deliveries from the northern Kirkuk oilfields.

Potential customers said they expected the first shipment in about a week or two, depending on communications with SOMO.

U.S. trader Bayoil and Jordan's Millennium already have tankers booked.

Iraq has eight million barrels of crude at Ceyhan ready for sale but it will take more time to resume exports from its dilapidated oilfields.

It is targeting mid-July for exports of 750,000 barrels per day, less than half pre-war sales. Lawlessness in the oilfields, particularly in the south, is hampering restoration efforts.

SOMO's newly-appointed head, Mohammed al-Jibury, said this week that Baghdad would resume direct contract links with established trading houses and refiners.

Previous contracts signed by oil trading firms under the U.N.'s oil-for-food programme were made void by Thursday's Security Council resolution.

Under oil-for-food, former president Saddam Hussein blacklisted U.S, British and Japanese companies and awarded deals to middlemen in exchange for kickbacks.

Officials in Baghdad are discussing whether to move back to U.S. dollar payments from the euro, introduced by Saddam in October 2000. The euro since then has risen in value from 83 cents to $1.17, helping boost Iraqi oil sale revenues.

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Direct Link:
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