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Iraq warns to cut its oil exports under UN deal

BAGHDAD: Iraq has told United Nations Secretary-General Kofi Annan it might cut oil exports under its oil-for-food deal with the United Nations because of a delay in getting humanitarian goods.

"It is not in our interest to continue to sell oil at current levels while we do not receive the goods that we have contracted to buy," Iraq's Trade Minister Mohammed Mehdi Saleh told Annan on the sideline of a summit of the U.N. Conference on Trade and Development being held in Bangkok.

"If the (U.N.) sanctions committee does not accelerate the approval of contracts particularly those of oil spare parts, ...Iraq will not be able to maintain current oil sales levels," he said.

Benchmark North Sea oil prices hit fresh nine-year highs of $28.20 a barrel last week and with world supplies tight any further cut in Iraqi exports could send prices even higher.

Saleh was quoted by Iraqi press after meeting with Annan as saying $8.3 billion from oil exports was still in an escrow account in a bank in New York while Iraqis were in dire needs of humanitarian goods.

He said Baghdad had sold $22 billion worth of oil since the beginning of the oil pact in December 1996 but it has received only $6 billion worth of goods, he added.

Iraq has also to pay 30 percent of its oil revenues to a Gulf War compensation fund and costs of U.N. agencies working in the country.

Under the deal with the United Nations, Baghdad is allowed to sell oil to buy food, medicine and other humanitarian goods for its people.

Iraq's Oil Minister Amir Muhammed Rasheed said on Friday that Baghdad would have to cut its oil sales by at least another 250,000 barrels per day if the United States kept blocking contracts for spare parts.

Iraq's oil exports have fluctuated in the past weeks, dropping to 1.4 million barrels per day (bpd) in the week ending January 28 from 1.86 million bpd the week, according to U.N. figures.

Baghdad has often accused the U.S. envoy at the U.N. sanctions committee of blocking contracts for parts.

The head of the U.N.'s humanitarian programme for Iraq, Benon Sevan, said last Monday, without naming any country but clearly referring to the U.S., that 1,000 contracts had been put on hold for both spare parts and humanitarian supplies, diplomats said.-Reuters