|
Pardon me for
being a little skeptical about this news and what it is expected to do to the
dollar. Don’t you wonder if Bush’s
trip to the ME was timed accordingly? - KWC Iraq returns to
international oil market
By Carola Hoyos and
Kevin Morrison in London, Financial Times Published: June 5
2003 20:02 Iraq on Thursday
stepped back into the international oil market for the first time since the
war, offering 10m
barrels
of oil from its storage tanks for sale to the highest bidder. For some international
companies it will be the first time in more than a year that they will do
business directly with Iraq. Companies such as ExxonMobil of the US, shied away
from directly buying Iraqi oil under the UN's oil-for-food programme as
Washington stepped up its rhetoric against the Saddam Hussein regime. But Iraq has some major obstacles to
overcome - most notably the lack of security - before its oil exports can again
flow on a sustained basis. Mohammed al-Jibouri,
head of Iraq's oil marketing, acknowledged the tender was a one-off sale. Even
so, the sale of 8m barrels of Kirkuk crude oil from Iraq's storage tanks at the
Turkish port of Ceyhan and 2m barrels of Basrah Light from the tanks in Mina
al-Bakr on the Gulf is an important step - and not only because it is expected
to generate more than $250m. Emptying the tanks will
allow Iraq to restore some crude oil flow through its pipelines towards the
ports. But how much oil will be available will depend on Iraq's ability to get
engineers - many of whom fear being kidnapped, robbed or having their cars
stolen on the way to the fields - back to work. In the meantime looters have damaged offices in Basra and
numerous oil installations around the country. The
tender, for which bids are due by June 10, switches the transaction back to
dollars
- the international currency of oil sales - despite the greenback's recent fall
in value. Saddam Hussein in 2000 insisted Iraq's oil be sold for euros, a political
move, but one that improved Iraq's recent earnings thanks to the rise in the
value of the euro against the dollar. The sale comes less than a week before the
Organisation of Petroleum Exporting Countries is due to meet in Doha, Qatar, to discuss whether to reduce its output
allocation to make room for Iraqi exports. Despite the tender, analysts do not expect OPEC to cut
production as any significant level of sustained exports from Iraq remains
months away. "The market is
still a bit sceptical about when Iraqi oil is coming back, because there
doesn't seem to be much control over the looting taking place," said one
trader in London on Thursday. Some analysts estimate
Iraq will not return to its pre-war export level of about 2.7m barrels a day
until the end of the year. Issam
Chalabi, a former Iraqi oil minister, says it could take Iraq as much as three
years and $5bn of investment to achieve 3.5m b/d, the volume Iraq pumped before
its 1990 invasion of Kuwait. The
benchmark oil futures on the New York Mercantile Exchange on Thursday rose 22
cents to $30.27 a barrel. The trader said the rise reflected uncertainty about
Opec's intentions next week at the Qatar meeting, and the prevailing tightness
in the US oil market, as commercial stocks rise slowly off 27-year lows. |
