Iraqi oil export suspension looms from midnight

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Iraqi oil export suspension looms from midnight November 30, 2000

By Hassan Hafidh

BAGHDAD (Reuters) - Iraq and the United Nations were on a collision course over oil pricing Thursday that looked set to halt Iraqi crude exports from midnight.

Last-minute gestures by both sides eager to avoid blame for disrupting the humanitarian oil-for-food exchange looked unlikely to prevent a stoppage, Iraqi customers said.

They said Baghdad still was insisting buyers pay an illegal surcharge for deliveries from December 1.

Baghdad reiterated to its clients that it would not release crude shipments after midnight unless buyers paid a 50-cent charge direct to an Iraqi bank account.

``We've been told again by SOMO (Iraq's oil marketer) that with no surcharge, we get no oil,'' said one Iraqi customer.

U.N. rules mean oil sale revenues go straight from Iraq's customers into an escrow account in New York where Iraqi purchases must be approved by a U.N. sanctions committee. Iraq wants to divert some of the funds as part of its efforts to escape a 10-year-old Gulf War embargo.

TANKERS TURN AWAY

By Thursday, many ships that had been queuing for oil at Iraq's outlets Mina al-Bakr on the Gulf and Turkey's Ceyhan terminal had turned away.

Tankers the Iran Seva and the Sea Song finished loading Kirkuk crude from Ceyhan later on Thursday evening. Others had left the port leaving no further scheduled liftings.

One customer still hoping to start loading Basrah Light crude at Mina al-Bakr on Friday said it had been informed that no oil would be available.

Iraq's oil marketer SOMO has provided no loading program for December and most of its customers already have found alternative supplies.

Iraq pumps about 2.3 million barrels daily, five percent of world exports.

Gulf rival Saudi Arabia, OPEC's biggest producer, has said it would step in to fill any significant export gap.

And U.S. Energy Secretary Bill Richardson said Washington could tap government inventories if necessary. ``We're ready to do it quickly. We have good, fast contingency plans,'' he told reporters.

BOTH SIDES LOOK TO AVOID BLAME

An Iraqi source in Baghdad said that Iraq was considering asking the U.N. to extend November prices instead of using the December formulas rejected by the world body earlier this week.

But by Thursday, the United Nations had not received new proposals from Iraq on December oil prices, U.N. diplomats and officials said in New York.

Iraq might request that the U.N. extend existing prices for the rest of phase eight of the oil-for-food deal, the source added. The eighth phase expires on December 5 but Iraq already has requested that it be extended to January 15.

The United Nations remained flexible and said it would allow Iraq's customers to keep loading crude for payment at a later date.

U.N. spokesman Fred Eckhard said Thursday that oil overseers hired by the United Nations would tell buyers of Iraqi oil immediately there was no agreed pricing mechanism for December exports.

``However loadings of oil can continue without a pricing mechanism but until there are U.N.-approved prices, no payments can be made for oil lifted,'' he said.

Once there is an agreed pricing mechanism, ``payments including for oil already loaded can resume into the U.N.-controlled Iraq escrow account,'' Eckhard added.

Even so, that would not resolve the issue of the illegal surcharge -- something that U.N. diplomats said Iraq has not even raised formally with the world body.

Dealers said that both Baghdad and the United Nations appeared intent on avoiding the blame for any stoppage.

``Iraq is saying we won't stop exports, it's the U.N.'s fault and the U.N. is saying that its options remain open,'' said one buyer.

^ REUTERS@

http://www.individual.com/story.shtml?story=d1130144.301

http://www.individual.com/story.shtml?story=d1130144.301



-- Martin Thompson (mthom1927@aol.com), November 30, 2000

Answers

Will it be a head on collision or just a game of chicken. I guess we will find out in the AM.

-- Martin Thompson (mthom1927@aol.com), November 30, 2000.

OPEC's Rodriguez hopes Iraq premium row resolved soon

OPEC's Rodriguez: Still no decision by Iraq on crude premium OPEC's Rodriguez says Iraqi crude still arriving at markets

By Sarah Weatherley Bridge News Caracas--Nov. 30

OPEC President and Venezuelan Energy Oil and Mines Minister Ali Rodriguez said Thursday that he hoped Iraq would quickly solve its ongoing dispute with its customers over their refusal to pay a premium on cargoes. Rodriguez said that Iraq had yet to make a decision but that Iraqi crude was still reaching its markets.

"We hope that this problem is resolved soon. There is still no decision on the part of Iraq but at least Iraqi stocks continue to arrive at the market," Rodriguez told reporters before leaving for the inauguration of President-elect Vicente Fox in Mexico.

Rodriguez went on to say that Iraq was "exercising its rights in a conflict which remains to be resolved." He did not say whether he had spoken with Iraq's Oil Minister Amer Rashid.

Iraq has proposed a formula below market value in order to allow customers to pay a 50 cents per barrel premium directly into an account outside U.N. control. The U.N. has rejected the proposed formula, while Iraqi officials have promised to battle for it.

Several companies that have contracts to buy Iraqi crude have been forced to reschedule liftings from this week until early December, casting doubt on whether those cargoes will be loaded if the United Nations does not approve a proposed Iraqi price plan.

Rodriguez noted that despite the Iraqi problem crude prices had fallen because the market was finally realizing that offer outweighed demand by 1.4 million barrels per day.

"This is translating into a build-up in crude inventories and speculators are therefore selling futures contracts to make profits as the market always does," he said.

http://www.petroleumworld.com/story1550.htm

-- Martin Thompson (mthom1927@aol.com), November 30, 2000.


Head-on collision, Martin.

BBC

Friday, 1 December, 2000, 13:08 GMT

Iraq halts oil exports

Iraq has gone ahead with its threat to halt oil exports in its latest onslaught on United Nations sanctions.

The Iraqi oil ministry blamed the UN for the stoppage, saying the organisation had rejected a request for an increase in the price and called for more talks.

Crude oil prices rose after Iraq cut supplies through the Turkish port of Ceyhan and the Iraqi Gulf port of Mina al-Bakr.

Iraq has been exporting an estimated 2.4 million barrels of oil a day, some 5% of world trade, almost all of it through the Ceyhan terminal.

The move was the latest twist in a deepening dispute between Iraq and the United Nations over international sanctions imposed on Baghdad 10 years ago.

Iraq on Thursday threatened to halt supplies to the already nervous oil market unless buyers paid a 50 cent a barrel surcharge into an Iraqi bank account, which would break UN sanctions.

The world benchmark Brent crude blend rose 30 cents a barrel to $32.19 in early trading in London on Friday.

US action

The US had earlier said it and its allies would take swift remedial action if Iraq halted oil exports.

Energy Secretary Bill Richardson said Washington was ready to release more oil from its strategic petroleum reserve, and would do so quickly if needed.

The UN says the surcharge Iraq requested would be illegal because it would break Gulf War sanctions that require all income from oil transactions to pass through the United Nations under its oil-for-food programme.

"The US is prepared to respond to Iraq if they take these steps," US Energy Secretary Bill Richardson had said. "We have good, fast contingency plans."

He added that several oil-exporting countries in the Middle East, including Saudi Arabia, had pledged to compensate for any shortfall.

However that extra output could take weeks to feed through.

In the meantime, consumers in the northern hemisphere are facing a winter with limited fuel supplies that could be about to get much tighter.

Iraqi confidence

Reports say the already high level of oil prices has boosted Iraq's funds for purchases of food and medicine to about $11bn, enabling Baghdad to sustain a halt in oil sales for some time.

Iraq, which has the world's second biggest oil reserves, has been growing steadily more confident in recent months amid widening cracks in the sanctions regime.

Earlier on Thursday, Baghdad again rejected new weapons inspection proposals.

Deputy Prime Minister Tariq Aziz responded with a blunt "No" when asked whether Baghdad would accept a mission under recently-appointed chief inspector Hans Blix.

His remarks came a day after UN Secretary-General Kofi Annan said he planned to start talks with Iraqi officials early next year aimed at breaking the deadlock over weapons inspections.

Inspectors have not been allowed into Iraq since the US and the UK launched air raids on Baghdad nearly two years ago.

The UN says sanctions imposed on Iraq after its invasion of Kuwait in 1990 will only by lifted when inspectors have verified that Iraq no longer maintains alleged weapons of mass destruction.

-- Rachel Gibson (rgibson@hotmail.com), December 01, 2000.


Iraq halts oil exports through Turkey (Updated at 1430 PST) ANKARA: Iraq halted late Thursday oil shipments through the Turkish port of Ceyhan, a spokesman of the Turkish state oil and gas company Botas said Friday.

http://www.jang.com.pk/thenews/dec2000-daily/01-12- 2000/main/update.htm#4

-- Martin Thompson (mthom1927@aol.com), December 01, 2000.


What does it tell you when a country that only produces 5% of the oil stops its lift and we (the U.S.) have to tap our strategic reserve. Conclusion, we are in a pretty fragile state.

-- Phillip Maley (maley@cnw.com), December 02, 2000.


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