Welcome Increase in the Number of Spare Parts Contracts Approved for Iraq's Oil Industry


United Nations Office of the Iraq Programme Oil for Food
January 21, 1999

The Executive Director of the Iraq Programme, Benon V. Sevan, today welcomed the release from hold, by the Security Council's 661 Committee, of 43 contracts for the supply of urgently needed spare parts and equipment for Iraq's oil industry. However, Mr Sevan noted that there were still 115 contracts on hold worth $44,989,420.

The 661 Committee's actions follow the Secretary-General's request on 29 December for the Committee to expedite the approval of contracts and further review those contracts placed on hold. Later this month, the OIP will arrange for oil industry experts to provide a further briefing to the Committee on the needs of Iraq's oil industry.

Since 1 January, 52 contracts worth $29,284,695 have been approved by the Committee. This includes the 43 contracts worth $11,709,796 released from hold.

Although the Security Council authorized Iraq to export up to $5.265 billion worth of oil in a six month period, the state of Iraq's oil industry and the depressed world price for oil combined to limit exports in the last phase (30 May to 25 November) to just over $3 billion dollars. Two thirds of the oil revenue funds for the oil-for-food humanitarian programme.

In order to increase production for export, the Security Council, in resolutions 1175 (1998) and 1210(1998), authorized Iraq to import a total of $600 million dollars worth of oil industry spare parts and equipment. The Secretary-General's reports to the Council have underlined the "lamentable" state of the oil industry and the urgent need to provide the minimum levels of spares and equipment.

Some of the equipment ordered under the provisions of resolution 1175 (1998) has begun arriving in Iraq. Shipments of demulsifier, valves, pipes and related equipment worth $10.3 million have already arrived with further arrivals expected over the coming weeks. Given the nature of the equipment being ordered many of the contracts entered into by the Government and its suppliers specify delivery dates up to three to twelve months after approval and issuing of letters of credit.

Oil Sector Contracts







On Hold






*These relate to resolution 1175 (1998).
So far no contracts have been received under resolution 1210 (1998).