Sun, Nov 02, 2003 - Page 10 News List

Iraqi oil exports muddle along

CHAOS AND MAYHEM Oil prices worldwide surged, while in Iraq the oil ministry struggled to overcome sabotage, smuggling and an overall lack of infrastructure

AFP AND REUTERS , NICOSIA, BAGHDAD AND NEW YORK

An Iraqi prays at a mosque in the flashpoint town of Fallujah, 50km west of Baghdad, Friday. One person was killed when angry residents stormed municipal offices in the flashpoint Iraqi town of Fallujah, civil defense officials said. Such actions continually hamper the reconstruction efforts of Iraqi officials.

PHOTO: AFP

Oil prices rebounded Fri-day in a technical correction after several days of losses triggered by easing concerns about US crude oil inventories, traders said.

New York's benchmark light sweet crude contract for delivery in December advanced US$0.64 to US$29.11 a barrel. Brent North Sea crude oil for December rose US$0.60 to US$27.70.

"It was technical buying, there was no news," said Fimat USA market analyst John Kilduff.

Prices had sustained a loss of over four percent through the week, hit by Wednesday's figures showing US crude stocks had risen for the third week in a row.

"Prices are retracing a little at the moment -- we are just seeing a bit of a correction," said trader Paul Goodhew at GNI-Man Financial in London.

"We feel that the downside is still there, that people will probably still come in and sell this market, but prices are probably down enough on the week."

The market derived little support from a 3.5-percent production cut by the Organization of Petroleum Exporting Countries, due to take effect from yesterday.

"Brent crude futures have fallen almost 14 percent since the market hit post-Iraq war highs following OPEC's announcement in September that it will cut crude production from November, with the cut coming into action" yesterday, said analysts at the Sucden brokerage firm.

Meanwhile Iraq's State Oil Marketing Organization (SOMO) reported that it exported an average 1.148 millon barrels per day (bpd) of crude last month, the Middle East Economic Survey will report in tomorrow's edition.

The nominations program for November is set for the export of 1.35 million bpd in November, the industry specialist said.

SOMO has signed contracts of over one millon bpd with international oil companies and traders, the Survey says.

"All the export volume is Basrah Light crude since Kirkuk deliveries have not resumed because of security reasons," the Cyprus-based weekly says.

"SOMO is not talking to us about Kirkuk exports in November," the Survey quotes a major oil company trader as saying.

Negotiations are underway to renew the contracts for the first half of next year.

Iraq's oil network has been repeatedly targeted by saboteurs in an apparent bid to deprive the US-led coalition ruling Iraq of a major source of income.

Northern Iraq's main oil export pipeline to Turkey may not resume operation in the coming week as planned, an Iraqi oil ministry source told reporters yesterday.

"The pipeline is still under repair. There is still uncertainty. We don't know if it will restart this week," the source said.

Oil officials had said the pipeline would resume operation in the first week of this month, after being shut due to damage from sabotage.

It had been due to restart in mid-October but that date was also missed due to sabotage.

The source also said a blast hit a pipeline carrying liquefied petroleum gas from Kirkuk to the south on Friday.

"Lack of security is really impacting operations. For instance Turkish truck drivers are scared to drive to Iraq to pick up fuel oil. So those exports have decreased," said the source.

"The situation is very fluid. We hope to reopen the pipeline in early November as planned but we are not sure that will happen."

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