Oil ministry chief does not expect output to reach pre-war levels for at least one year due to looting, weak power.

By Kamal Taha - BAGHDAD - <a href=www.middle-east-online.com>Middle East Online Iraq plans to resume oil exports in the third week of June but does not expect production to return to pre-war levels for at least a year, acting oil ministry chief Thamir Ghadhban said Monday.

"We are processing contracts now with various interested parties and we hope that during the third week of this month the first shipment will be made available to the international market," Ghadhban said.

"Hopefully by the end of this month we will be producing about 1.5 million barrels per day (bpd) of crude oil and about two-thirds of that will be made available for export."

Ghadhban said output had already reached 500,000 bpd in the northern oil fields and 200,000 bpd in the south, but said he did not expect output to reach its pre-war levels for at least a year because of continued looting of the infrastructure and the wartime collapse of the power grid.

He has previously put pre-war production at three million bpd, although most Western analysts estimate it at closer to 2.5 million.

Ghadhban said the oil ministry had already recruited 3,000 security guards to protect facilities and expected to take on more.

The Iraqi bureaucrat said his staff and their advisors from the US-led coalition were reviewing all the existing contracts signed under the old regime, which favoured Chinese, French and Russian firms.

"We will be studying our contracts and evaluating them for contractual, legal and economic viability and take the proper decision in the future in the right time," he said.

But he promised that all foreign oil firms would be treated fairly as Iraq valued its position as a major supplier.

"We will be fair and just to everybody," he said.

"We are an international oil industry and therefore we are very careful and very serious about having amicable relationships with all international oil companies."

Ghadhban said Iraq was keen to reopen a 2.5-billion-dollar pipeline to Saudi Arabia which has been closed since Saddam Hussein's 1990 invasion of Kuwait and said he hoped the Saudi authorities would recognize Iraqi ownership over its entire length now that the strongman has been ousted.

He said it would not be for him to decide the fate of a pre-war agreement under which Jordan received all its import needs from Iraq, half of it for free and the rest at preferential rates.

"The agreement was between governments, not between oil ministers," he said. "That's why it is not a matter for the oil ministry to decide."

Ghadhban reiterated that there were no immediate plans to pull Iraq out of the OPEC oil cartel, although it would ultimately be a matter for a future Iraqi government to decide.

"Iraq is one of the founder members of OPEC with Saudi Arabia, Kuwait, Iran and Venezuela and ... has been and remains a member," he said.

"I am certain that as soon as the government is established, it is going to take the appropriate decision and Iraq certainly has all the means to remain a member."

British and US officials have made clear that they do not foresee handing over power to a sovereign Iraqi government for between one and two years.

In the meantime, US officials have pledged they will do nothing to prejudice the eventual decision.

"We will want to make sure that any decision on their future participation in OPEC is a decision that the representative government takes," US Under Secretary of State for Economics and Business Alan Larson told a Senate committee earlier this month.

"We need to be careful not to be seen as steering that because it does need to be seen as a decision they make in the interests of Iraq."

The Age June 10 2003 By David Adams

Related links: Crackdown on alleged 'terror boss' Terror expert calls for checks on airport staff Website: Islamic Youth Movement

A CIA report has named a Sydney man as Osama bin Laden's "man on the ground" in Australia, it was claimed last night.

According to Four Corners, the CIA report, issued last June and based on uncorroborated intelligence from the Palestinian Authority, said al-Qaeda was very active in Australia.

It said there were "rank and file and leadership elements heading to Australia with forged passports". It named Bilal Khazal, a resident of Lakemba, Sydney, as having connections with al-Qaeda and Osama bin Laden.

"The al-Qaeda leadership has allegedly delegated responsibility to Bilal Khazal," it said.

It said Mr Khazal, named by the program as the man behind the Sydney-based Islamic Youth Movement's magazine and website, had been closely watched since September 11.

The report claimed Mr Khazal was "reportedly planning an explosives attack against some US embassies", including one in Venezuela, as well as against US interests in the Philippines.

The program also said that in mid-2000 "there was intelligence that Mr Khazal was sending recruits from Australia overseas to train in Afghanistan".

Four Corners said it had been able to verify much of the detail in the CIA report but that Mr Khazal refused to comment on the record. The Age could not contact Mr Khazal last night.

According to Four Corners, Mr Khazal's home has twice been raided by authorities. The program said his passport was confiscated in February last year, the day before he was due to go overseas.

It also said that Mr Khazal was shifted from his job as a baggage handler at Sydney airport's international terminal following a security review in the lead-up to the Olympics.

The program also detailed allegations that al-Qaeda and banned terrorist group Jemaah Islamiah had plotted to bomb Israeli targets in Sydney and Canberra and to kill Jewish mining millionaire Joseph Gutnick.

The program also claimed that investigations had revealed the operations of the Philippines-based rebel group MILF (Moro Islamic Liberation Front) were being partly financed from Australia.

Reuters, 06.09.03, 8:55 AM ET By Tom Ashby DOHA, June 9 (Reuters) - OPEC gathered in the tiny Gulf state of Qatar on Monday amid signs the cartel will stay its hand on cutting output in an effort to refill depleted oil inventories in the West. Stocks have stayed low after two months of zero exports from Iraq, the world's seventh largest exporter before the U.S.-led invasion, despite big output hikes from other members of the 11-member cartel. "When there was perhaps some overproduction, the low stock levels captured some of the oil. Now we have to see how low those stocks are," OPEC Secretary-General Alvaro Silva told reporters here ahead of Wednesday's meeting. With prices at the top end of OPEC's $22-$28 per barrel target range, Indonesia and Venezuela have said there is no need for any cut now from its 25.4 million barrel a day ceiling. Silva said OPEC's previous meeting in April, which raised quotas to cover for Iraq's export halt, had kept prices steady, with OPEC's latest basket price at $26.77 per barrel. "We are going to see what measures should be taken; if we should keep things as they are, if we should make an adjustment, a cut. I can't yet say which," he told Reuters. RIVAL EXPORTERS The Middle East-dominated cartel, which controls half of world exports, will most likely use the Doha meeting to prepare the ground for a possible cut later this year when Iraqi output is expected to rise. "With prices where they are I don't think OPEC will do anything," said Nauman Barakat, a broker at Fimat International Banque. "They will probably call another meeting once Iraq comes back and rope in non-OPEC to do its bit," he added. OPEC has invited rival exporters including Mexico and Russia to Qatar, hoping to maintain a fragile partnership that has kept OPEC's basket near $25 per barrel for four years -- a boom price compared to the previous decade. Recovering from the war, Baghdad is preparing to resume international sales in about a week's time. Shipments are expected to rise sharply over the next few months, but still well below pre-war levels. In April, OPEC ministers said they were ready to cut up to two million barrels per day (bpd) to make room for Baghdad. However, prices have remained higher than some expected, while stocks in consuming countries such as the United States have failed to recover fully from historically low levels. Data from the OPEC secretariat now shows that the world market can absorb some 1.3 million bpd above forecast demand during the third quarter to replenish stocks, an OPEC source said, asking not to be named. "That means there is more than enough room for Iraq at current quota levels," he told Reuters, predicting Iraqi supply at 1.5 million bpd in the third quarter. OPEC powers Saudi Arabia and Venezuela met with Mexico in Madrid on Friday to discuss the return of Iraq. Venezuela's Oil Minister Rafael Ramirez visits Norway on Monday. Venezuela said there was adequate oil supply to meet demand, and non-OPEC countries including Mexico, Russia and Norway were willing to coordinate output policy.

Mon June 9, 2003 07:59 AM ET By Tom Ashby

DOHA, Qatar (<a href=asia.reuters.com>Reuters) - OPEC gathered in the tiny Gulf state of Qatar Monday amid signs the cartel will stay its hand on cutting output in an effort to refill depleted oil inventories in the West.

Stocks have stayed low after two months of zero exports from Iraq, the world's seventh largest exporter before the U.S.-led invasion, despite big output hikes from other members of the 11-member cartel.

"When there was perhaps some overproduction, the low stock levels captured some of the oil. Now we have to see how low those stocks are," OPEC Secretary-General Alvaro Silva told reporters here ahead of Wednesday's meeting.

With prices at the top end of OPEC's $22-$28 per barrel target range, Indonesia and Venezuela have said there is no need for any cut now from its 25.4 million barrel a day ceiling.

Silva said OPEC's previous meeting in April, which raised quotas to cover for Iraq's export halt, had kept prices steady, with OPEC's latest basket price at $26.77 per barrel.

"We are going to see what measures should be taken; if we should keep things as they are, if we should make an adjustment, a cut. I can't yet say which," he told Reuters.

RIVAL EXPORTERS

The Middle East-dominated cartel, which controls half of world exports, will most likely use the Doha meeting to prepare the ground for a possible cut later this year when Iraqi output is expected to rise.

"With prices where they are I don't think OPEC will do anything," said Nauman Barakat, a broker at Fimat International Banque. "They will probably call another meeting once Iraq comes back and rope in non-OPEC to do its bit," he added.

OPEC has invited rival exporters including Mexico and Russia to Qatar, hoping to maintain a fragile partnership that has kept OPEC's basket near $25 per barrel for four years -- a boom price compared to the previous decade.

Recovering from the war, Baghdad is preparing to resume international sales in about a week's time. Shipments are expected to rise sharply over the next few months, but still well below pre-war levels.

In April, OPEC ministers said they were ready to cut up to two million barrels per day (bpd) to make room for Baghdad.

However, prices have remained higher than some expected, while stocks in consuming countries such as the United States have failed to recover fully from historically low levels.

Data from the OPEC secretariat now shows that the world market can absorb some 1.3 million bpd above forecast demand during the third quarter to replenish stocks, an OPEC source said, asking not to be named.

"That means there is more than enough room for Iraq at current quota levels," he told Reuters, predicting Iraqi supply at 1.5 million bpd in the third quarter.

OPEC powers Saudi Arabia and Venezuela met with Mexico in Madrid Friday to discuss the return of Iraq. Venezuela's Oil Minister Rafael Ramirez visits Norway Monday.

Venezuela said there was adequate oil supply to meet demand, and non-OPEC countries including Mexico, Russia and Norway were willing to coordinate output policy.

Times Online June 09, 2003 By Carl Mortished, International Business Editor

THE Opec oil producer cartel is unlikely to agree a production cut at its meeting in Doha this week despite rising anxiety over the imminent resumption of Iraqi oil exports.

Qatar’s Oil Minister said yesterday that there was no immediate plan to reduce the flow of crude. “We won’t just cut for the sake of cutting,” he said. However, he indicated that potential Iraqi output would be on the agenda at Wednesday’s Opec meeting.

The Opec leaders are taking comfort from a buoyant oil price which rose above $31 in New York on Friday. The oil ministers of Saudi Arabia and Venezuela met with their non-Opec Mexican counterpart in Madrid last week in the hope of garnering support for cutbacks when Iraq returns to the market. Rafael Ramirez, the Venezuelan oil minister, said: “We are also in contact with Russia and Norway and I think we will get good results.”

The Opec leaders’ plans are being confounded by the continuing high price of oil despite fundamental weaknesses in the market. Leo Drollas, of the Centre for Global Energy Studies, said: “It is a tale of two halves. The western hemisphere is tight while the east is getting weaker.”

The US is still short of petrol and crude stocks have still not fully recovered from the shortages caused by the Venezuelan oil strike last winter. In Asia the picture is quite different, with refiners in Singapore cutting their output in response to weak demand.

Iraq hopes to begin normal crude exports by the end of the month but a substantial contribution to global production is probably months away.