Iraq may double oil-for-food deal with Indonesia

JAKARTA (JP): Iraq will likely double its oil-for-food trade deal with Indonesia next year from the current value of US$500 million to $1 billion, Minister of Trade and Industry Luhut Pandjaitan said here on Wednesday.

"The Iraqi government official has told me they would allocate US$1 billion for their oil export deal to Indonesia next year," he told a hearing with House Commission V in charge of trade and industry.

As part of the United Nations-backed food-for-oil program with Iraq, Indonesia is entitled to sell $500 million worth of food products and other products and services in the health, education, telecommunication, transportation and agriculture sectors to Iraq every six months.

In return, Iraq will pay Indonesia in crude oil, he said.

Under trade sanctions enforced since its 1990 invasion of Kuwait, Iraq has been authorized as of December 1996 to export crude oil in six-monthly intervals to finance imports of humanitarian supplies.

Data from the ministry's office showed that as of October last year, Indonesia bought a total of 10 million barrels of crude oil from Iraq under the food-for-oil deal.

In return, Indonesia has sold $74.460 million worth of goods, including foodstuffs like tea and cooking oil, to Iraq under the first five phases of the deal.

Luhut said Indonesia had so far bought Iraq's crude oil under the barter program through a state-owned oil and gas company subsidiary PT Perta Oil.

He said nine other local companies, including PT Concord Perdana Indonesia, PT Gemilang Energindo Sentosa and PT Sri Mukti Gas Corporation, had been appointed to also participate in the oil trade for the next phase.

"Only local companies can participate in the program. They must first acquire the UN's approval before being able to export their goods to Iraq," he said.

Under the latest contract, about 24 local companies are registered on the foodstuffs export program with Iraq and about 140 other companies have already begun applying for approval to participate in the next phase, he said.

Luhut said that despite the high enthusiasm expressed by many local exporters toward the food-for-oil deal, Indonesia had not been able to meet the current export value target of $500 million to Iraq.

"We're under-capacity to meet the target. It's so sad that we can't fully take advantage of such a good opportunity," he said.

He said the government would help enthusiastic companies in a way which would allow them to run their export business at the optimum level.

Indonesia is committed to the food-for-oil trade deal with Iraq, he said, adding that the deal is very profitable for Indonesia, especially in helping to boost the country's export of non-oil commodities.

Indonesia is one of the world's major crude oil exporters but still imports a certain type of crude oil to feed its refineries. The larger part of the oil imported from Iraq is reexported. (cst)