DATE=12/03/00

TYPE=CORRESPONDENT REPORT

NUMBER=2-269981

TITLE=IRAQ OIL UPDATE (L)

BYLINE=SCOTT BOBB

DATELINE=CAIRO

CONTENT=

VOICED AT:

/// re-running to change 5th paragraph of text, to clarify; rest remains the same ///

INTRO: Iraq's oil minister says the Iraqi government has no intention of halting or interrupting crude oil exports, two-days after pumping crude oil was suspended at two major terminals. Correspondent Scott Bobb reports from our Middle East Bureau in Cairo that the statement follows remarks by another senior Iraqi official who indicated oil exports would stop unless there is a new price arrangement with the United Nations.

TEXT: Iraq's Oil Minister, Amir Mohammad Rasheed, said Iraq's oil policy always aims to create stability in the oil market and it has no intention of interrupting exports of crude oil.

Mr. Rasheed said Iraqi exports were suspended last Friday because the U-S representative to the United Nations made, what he called - a sinister proposal to allow exports to continue without agreement on a new price formula. Mr. Rasheed said he is optimistic such an agreement would be reached.

The oil minister's remarks come two-days before the expiration of the current phase of the U-N supervised, oil-for-food program for Iraq - and shortly after Irraqi Deputy Prime Minister Tariq Aziz, indicated Iraq would halt exports.

/// AZIZ ACT IN ARABIC ///

Mr. Aziz told reporters Iraq has the right to choose a suitable price for its oil exports. He added if Iraq's price is refused, there will be no new contracts and exports will be halted.

Iraq has told the United Nations it wants 50-cents per barrel, or about two-percent of the price deposited in a bank account outside of U-N control, for Bagdhad's use to defray production costs. U-N officials refused.

Under agreements negotiated four-years ago, Iraq is allowed to export oil in exchange for food, medicine, and other non-military supplies. But a U-N committee oversees the transactions and places one-third of the revenues in a special account to compensate victims of the Gulf War.

Iraq produces two-point-four-million-barrels of oil per day - about five-percent of world production. And the threat of a cut-off came at a time of high demand and tight supply on the world market.

Iraqi oil exports have been restricted since the Gulf War as part of international sanctions. The oil-for-food program was established four-years ago amid criticism that sanctions were only hurting the Iraqi people, while strengthening the Iraqi regime.

/// REST OPT ///

The Iraqi government has been waging a diplomatic and public relations campaign against the sanctions. Iraqi oil exports outside the oil-for-food program have increased in recent years. And in the past three-months, dozens of international flights have challenged the ban on commercial air travel to Iraq, landing in Baghdad with foreign humanitarian workers, government officials, and some businessmen.

Two permanent members of the U-N Security Council - the United States and Britain - maintain the sanctions must be strictly enforced until Iraq agrees to cooperate with U-N weapons inspections.

Three other permanent members - Russia, China and France - say the sanctions should be eased if Iraq allows weapons monitoring to resume. (SIGNED)

NEB/FSB/RAE/FC