IRAQ - Aug. 20 - Oil Sales Plunge As US Grows Wary.

A report in The FT says: "Iraqi crude oil exports have plunged since last year, with the US importing 90% less, in a sign that American oil companies have become wary of doing business as debate over military action intensifies". The report quotes a UN official as telling ambassadors of the UN Security Council in a closed-door emergency session on Aug. 16 that the UN humanitarian programme, which relies on funding from Iraqi oil exports, was being crippled by US oil companies' reluctance to buy crude oil. A year ago Baghdad exported 69% of its oil to the US, but since late-May 2002 the share has dived to 16%, according to UN documents obtained by The FT. Meanwhile, overall Iraqi exports have been halved, dropping from a little less than an average 2m b/d in phase 10 of the oil-for-aid deal - which ran from early-July 2001 until late-Nov. 2001 - to just short of 1m b/d from the beginning of the current phase in late-May 2002. (Buying oil from Iraq via the UN is legal, but the programme has been tainted by Baghdad, which has charged buyers illegal kickbacks of 15-45 cents per barrel. Although big US oil companies such as Chevron, Valero and Exxon use middlemen to buy the oil and claim they are not involved in the illegal kickbacks, the stakes of being involved in the programme have risen significantly as the US administration has made clear its aim to remove Hussein, possibly by military force. The drop means that US companies would also be less dependent on Iraqi oil supplies, which would almost certainly be interrupted in the event of an attack. Iraqi crude oil has become generally less attractive because of the inconsistency of supply and the strict UN pricing policy the US and UK instituted to combat the kickbacks. This has jeopardised the UN oil-for-aid programme, which lets Baghdad buy food, medicine and other humanitarian products using its oil revenues. The programme suffers from a $2 bn shortfall that risks becoming a point of contention among UN Security Council members as Washington is hoping for the group's support in its renewed effort to dislodge Saddam).