Iraq won't resume oil exports until U.N. approves prices

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Iraq won't resume oil exports until U.N. approves prices, Iraq's U.N. envoy says

By EDITH M. LEDERER The Associated Press 12/4/00 8:13 PM

UNITED NATIONS (AP) -- A day after saying it would resume some oil shipments, Iraq said Monday it would only do so once it comes to agreement with the United Nations over prices.

Saeed Hasan, Iraq's U.N. ambassador, said Iraq hopes to reach a compromise in the next few days, signaling a new willingness to come to an agreement. Iraq stopped oil shipments last week over the pricing dispute and oil prices unexpectedly started tumbling.

On Sunday, Oil Minister Amer Mohammed Rashid said Iraq would resume exporting oil to fulfill contracts already signed under the U.N.'s oil-for-food program. The four-year-old program allows Iraq to sell oil, provided the proceeds are used to buy food, medicine, and other humanitarian supplies and equipment to rebuild its frayed oil infrastructure.

But Hasan confirmed Monday that no oil had been loaded on tankers since late Thursday. Asked when exports would resume, he replied, "when they get the pricing formula."

The Iraqi envoy said he was hopeful that discussions between officials of Iraq's State Oil Marketing Organization and U.N. Oil Overseers would produce a compromise agreement. The two sides were only 5 to 20 cents apart, he said, adding that a compromise was possible as early as Thursday.

The Security Council was also hopeful, Western diplomats said.

"Both sides should be as flexible as possible," said Benon Sevan, the executive director of the U.N.'s oil-for-food program.

In Washington, the United States responded cautiously over any resumption of Iraqi shipments.

"Given that it is Iraq and what we've seen in the past, we don't want to count our chickens before they hatch," State Department spokesman Richard Boucher said.

Last week, Iraq submitted export prices for December that U.N. oil experts determined were too low -- and the U.N. committee monitoring sanctions imposed after Iraq's 1990 invasion of Kuwait rejected them.

Hasan denied that Iraq wanted buyers to pay a surcharge of 50 cents a barrel that would be put into a bank account controlled by Baghdad. "These are rumors -- this 50 cent surcharge -- nothing official," he said.

Baghdad's low price proposal was thought to be an attempt to compensate buyers for the surcharge.

Foreign oil companies last month reported receiving faxed instructions from Iraq's state oil marketing company demanding the surcharge. But they refused to make any payment because it would violate U.N. sanctions that put Iraqi oil profits under U.N. monitoring.

An agreement on prices for December oil shipments should be easier this week, since oil prices have fallen nearly 7 percent since Friday. The drop followed announcements by major industrialized nations that they would tap their strategic reserves to fill any shortages caused by a halt in Iraqi exports.

The Security Council is expected to vote Tuesday on whether to extend the oil-for-food program for another six months.

Western diplomats said the two most contentious issues are Iraqi demands to use about $1.30 from every barrel of oil revenue for oil industry-related expenses, and to pay its $11 million in U.N. arrears from oil sales. France backs both proposals; the United States opposes them.

http://www.nj.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi?a0755_BC_UN-Iraq-Oil&&news&newsflash-international

-- Martin Thompson (mthom1927@aol.com), December 04, 2000


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