The news will certainly change the oil prices-- Iraq to resume oil exports in third week of June

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."