Turkey becomes first country to by Iraqi oil

Turkey becomes first country to by Iraqi oil

ANKARA (Reuter): Turkey yesterday snapped up the first batch
of Iraqi crude on the world market for six years under a United
Nations deal allowing Baghdad to sell a limited amount of oil to
buy humanitarian supplies.

State-owned oil refiner Tupras said it had signed an accord
with Iraqi state oil marketing body SOMO to take 75,000 barrels
per day, equivalent to 3.6 million tons of oil a year, effective
immediately.

The Turkish company statement gave no price for the deal.
Iraqi Oil Minister Amir Muhammad Rasheed said earlier Iraq would
give preference to Turkey in selling the oil and Iraq had sent
two contracts to the UN secretary-general to enable Iraq to sell
oil to international companies.

UN clearance on Monday for US$2 billion worth of Iraqi oil
exports over six months paved the way for the deal with Turkey,
one of the country's outside Iraq hit hardest by UN sanctions
imposed on Baghdad after it invaded Kuwait in 1990.

Neighboring Turkey says it has lost $27 billion in trade
because of the sanctions.

Under the UN deal, Iraq will use revenue from the oil sales to
buy medicine, food and other humanitarian supplies. Part goes to
compensate victims of the invasion of Kuwait and costs of the UN
commission supervising the destruction of Iraqi weapons of mass
destruction.

Turkish traders and businessmen are hoping for the lion's
share of the renewed trade. Turkish companies already sell Iraq
basic foodstuffs, mostly wheat flour, pulses and sugar, under
UN auspices.

Other sanctions on Iraq remain in place. The oil sales and
purchase of humanitarian supplies are subject to close UN
monitoring. If all goes well, the Security Council may renew the
oil-for-food deal when the initial six months expire.

But United States State Department deputy spokesman Glyn
Davies said the deal did "not signal an end or the first step
toward the end of the sanctions" against Iraqi President Saddam
Hussein.

Iraqi President Hussein yesterday pressed a button to send oil
exports through a pipeline to the Turkish terminal of Ceyhan on
the Mediterranean.

Senior Turkish officials are expected at a ceremony at Ceyhan
on Dec. 16 to celebrate the loading of oil tankers with Iraqi
oil, the Turkish energy ministry said.

Tupras said a Turkish vessel was en route for Ceyhan to load
the first oil. It gave no information on the oil's quality.
Tupras has annual refining capacity of 27.6 million tons with
refineries in the towns of Batman, Izmir, Izmit and Kirikkale.

Twelve million barrels of oil is trapped inside the twin
pipelines, of which about 3.8 million barrels belong to Turkey.

Oil officials earlier said the smaller 40-inch-diameter
pipeline would be used for Iraqi sales. This 986-kilometer line
can carry up to 46.5 million tons a year.

Before the UN embargo Iraq pumped an average 1.5 million
barrels per day of oil, about or nearly two-thirds of its total
oil exports, through the pipeline.

Under the current deal Turkey's state-owned pipeline company
Botas is expecting to earn around $50 million from transporting
the Iraqi oil. Most oil exports must go via Turkey under the UN
deal.

The rest of the $2 billion worth of Iraqi oil is to be loaded
at Iraq's southern Mina al-Bakr oil terminal, from which oil was
expected to flow on Friday or Saturday, Iraq's Rasheed said.