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U.N. Says Oil Exports Slow to Rise to Help Needy Iraqis

December 31, 1998
Web posted at: 10:10 PM EST (0310 GMT)


NEW YORK (Reuters) -- Iraq's people are unlikely to see an increase in humanitarian supplies in 1999 without a sharp rise in oil prices, as investment in the country's crumbling oil infrastructure will take at least a year to produce results, according to a United Nations report released on Thursday.

Most ordinary Iraqis get their basic food and medical supplies via the U.N.'s "oil-for-food" programme, which allows Iraq to export oil under strict supervision as an exception to the oil embargo in place since the 1990 invasion of Kuwait.

Two-thirds of funds from the oil sales go to buy food, medicines and other supplies for Iraq's people; the other third pays U.N. costs and war reparations. Iraq is theoretically permitted to sell up to $5.256 billion of oil over six months, which the U.N. says is the amount needed to meet the basic needs of Iraq's 22 million people. But Iraq, in fact, is only expected to raise about half that because of low oil prices and its poor infrastructure.

Thursday's report, written by U.N. staff after a group of oil industry experts from the Dutch company Saybolt visited Iraq earlier this month, says the country's oil production is declining at a rate of 4 percent a year. It says that even after spending the $600 million that Iraq is allowed to divert from humanitarian goods to oil infrastructure repairs, oil production is likely only to remain at current levels of about 2.5 million barrels per day (bpd), of which a little under 1.9 million bpd is exported.

The Saybolt team said some oil fields are being harmed and some face irreparabe damage unless improvements are made soon.

Before sanctions were imposed, Iraq, which sits atop the world's second-largest oil reserves afterSaudi Arabia, exported 3.2 million bpd of oil.

The impact of sanctions on Iraq's population has been devastating and shows little sign of improving. The United Nations International Children's Emergency Fund (UNICEF) has reported that a million Iraqi children under five are chronically malnourished, an increase of 72 percent since 1992. Iraq claims that a million people have died as a result of sanctions.

"It is extremely unlikely that the Iraqi oil industry will ever meet the planned production targets associated with the oil-for-food programme, within the current constraints," the report said.

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