Iraq Smuggling Oil from Gulf Via Jordan

Reuters | February 21, 2003 | Jonathan Leff and Stefano Ambrogi

[HAL9000]

LONDON (Reuters) - Iraq is smuggling large shipments of crude from a Gulf port via Jordan in Baghdad's most successful contravention yet of United Nations sanctions, oil industry and shipping sources said on Friday.

Iraq has in the past smuggled oil on small vessels out of the Gulf and two years ago began pumping a steady stream of 200,000 barrels per day overland via pipeline to Syria.

But the latest shipments represent Baghdad's boldest move yet in its efforts to regain control over oil revenues from the U.N. and come as the United States presses for possible military action to unseat President Saddam Hussein.

Oil traders and shipping sources said at least some of the oil is linked to a company in Jordan named Millennium, which has chartered at least one tanker. The sources said the crude was sailing out of the Gulf to Jordan's Aqaba port on the Red Sea and being transshipped to smaller tankers for resale elsewhere.

The one confirmed shipment is the million-barrel tanker Argosea, whose owners Greece's Tsakos Shipping said loaded at Iraq's Gulf Khor al-Amaya terminal on February 18.

Tsakos general manager Harry Hajimichael told Reuters the vessel now had been ordered into port by Tsakos for an internal company investigation.

"She went into Mina and pilots instructed the tanker to go to the other terminal (Khor al-Amaya) to load," said Hajimichael.

"The vessel was instructed by the charterers to load from Iraq and we were not aware of a difference between the two terminals," he said the vessel was on long-term charter to an unnamed but reputable company.

Khor al-Amaya is located adjacent to Mina al-Bakr, one of two outlets, along with Turkey's Ceyhan, authorized by the United Nations for Iraq's exports but is not monitored by U.N. inspectors.

Ian Steele, a spokesman for the U.N. oil-for-food program in New York, confirmed that the Argosea was not on a list of recent U.N.-approved loadings from Mina al-Bakr.

Although oil from Khor al-Amaya would have to sail past U.S. Navy interdiction forces in the Gulf, a spokesman for Navy command in the region contacted by Reuters was unable to confirm the movement of such large shipments.

HEADING EAST?

Iraq is allowed to export unlimited quantities of crude under the U.N.'s post-Gulf War oil-for-food program out of Mina al-Bakr and Turkey's Ceyhan.

Revenues from those sales go into a New York escrow account controlled by the U.N. for the purchase of humanitarian goods.

It remains unclear who exactly are the final customers for the smuggled crude after it arrives for transshipment in Aqaba, or its final destination. Jordan is too small to need such large volumes.

Several smaller oil tankers chartered over the past few months have exported from Aqaba to Singapore or China. Dependent on Iraq for imports via a special exemption to sanctions, Jordan typically does not export crude.

Jordan late last year bought the very large crude carrier Berge Chief to use as floating storage in case of disrupted crude supplies from Iraq. Industry sources said this could be used for transshipping Iraqi crude to other vessels.

Shippers and traders contacted by Reuters said that six more tankers totaling nine million barrels had been chartered in recent days to load from the unauthorized port.

Even at discounted prices the crude would be worth about $250 million on the international market.

At least one of those tankers, Arcadian I, has been chartered to discharge at Aqaba soon, the shipping sources said. The owner of the vessel declined to comment on its charter.

The other five tankers were identified as the Seacross II and Violando, both carrying two million barrels, plus the Sea Victory, Eagle and the Artemis, all one-million-barrel tankers.

An official at Thenamaris Inc, owners of the Seacross II, said its cargo was waiting to berth at Mina al-Bakr, rather than Khor al-Amaya adding: "We told the charters that we will only load U.N.-sanctioned cargo from U.N.-sanctioned ports. We clearly put it to the charterers."

Owners of the Violando and the Sea Victory also said their tankers were en route to the authorized Mina al-Bakr terminal. The Sea Victory loaded a legitimate crude oil cargo bound for India at the beginning of this month.

A representative of the owner of the Artemis said its ship was currently at Aqaba awaiting instructions.

The United States is the single biggest buyer of Iraq's U.N.-authorized exports that recently have been running at about 1.7 million barrels a day.

[sheik yerbouty]

If the Jordanians are in cahoots with Saddam, they must be punished.