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Iraq says oil sales halted until UN changes mind
By Huda Majeed Saleh
BAGHDAD, June 3 (Reuters) - Iraq said on Sunday it would not resume oil exports until the U.N. Security Council backed down on Friday's resolution that extended a U.N. oil-for-food exchange by a month instead of the normal six months.
"We hope that the Security Council will back down from its stand and extend the memorandum of understanding normally to enable Iraq to resume its oil exports," Oil Minister Amir Mohammed Rasheed told reporters.
Rasheed said Baghdad wanted a simple 180-day rollover of the programme.
The Security Council on Friday voted for a stopgap 30-day extension to allow more time to consider a proposal by Britain and the United States for a complete overhaul of sanctions.
Iraq had announced on Saturday that it would halt oil exports from Monday as a protest at the U.N.'s decision.
Rasheed said that Iraq's oil trade with its immediate neighbours would not be affected by its decision to halt sales under oil-for-food.
"We will stop oil exports from (the Turkish port) Ceyhan and al-Bakr terminal but trade of oil exports and oil products outside the (oil-for-food) memorandum of understanding continuing via borders with neighbouring countries," he said.
Ceyhan and the Gulf port of Mina al-Bakr are the two approved points for exports under the U.N. exchange.
Iraq sells about 250,000 barrels daily to Turkey, Jordan and Syria at discounted prices with payments going direct to the government of President Saddam Hussein. Revenues from sales of some 2.1 million barrels daily under oil-for-food are controlled by the U.N.
Britain and the United States propose lifting restrictions on civilian goods imported to Iraq while cracking down on oil smuggled to Baghdad's neighbours.
Rasheed said Baghdad would honour outstanding oil contracts under the exchange once exports were resumed.
"We are fully committed to the contracts when we resume oil pumping," he said.
"Iraq has signed contracts for the months of June, July, August and part of September," said the minister.
Sanctions have been in place since Iraq's invasion of Kuwait in 1990 and oil-for-food has provided limited relief for civilians since the programme began in December 1996.
Rasheed said the humanitarian programme would not be affected by Iraq's decision to halt oil supplies.
"A large number of contracts for the purchase of humanitarian supplies have already been approved," he said. "Besides Iraq has huge funds from revenues in the U.N. account which will be used to pay suppliers of goods to Iraq."
"Revenues will start to go down until we resume, hopefully soon, oil exports," Rasheed said.
SAUDI "SUBMISSIVE TO U.S."
Rasheed said he was not surprised that fellow OPEC member Saudi Arabia had pledged it would fill any gap in world oil supplies caused by the Iraqi stoppage.
He said he saw no need for a change in OPEC's production ceiling.
"It is not strange that Saudi takes a stand that reflects its submission to the American will," Rasheed said.
"We hoped to see an independeant stand by Saudi that serves interests of its people and its role within OPEC and not a stand that serves the American administration."
It remains unclear whether Saudi and other OPEC oil ministers, who meet in Vienna next week for scheduled talks, will move immediately to compensate for the Iraqi stoppage.
OPEC had been expected to maintain current supplies to keep prices in its $22-$28 a barrel target range for a basket of its crudes. The group cut output by 2.5 million barrels daily earlier this year.
The OPEC basket was valued at $26.56 on Thursday and ministers may prefer to wait for prices to rise above $28 for before triggering extra output.
-- Martin Thompson (email@example.com), June 03, 2001