BAGHDAD, 20 July 2003 — Iraq is preparing to issue its third postwar crude oil sell tender, underlining concerns Iraq is not yet poised to deliver sustained exports from oil fields, a senior Oil Ministry official said yesterday.

The official said there was no firm date yet for the tender, with expected volumes of eight million barrels. “The tender is under discussion. Right now it is still the only way we can sell the oil,” he told Reuters.

The official said the crude would probably come from Iraq’s southern oil fields, which are seen as a more reliable than crude that would flow through Iraq’s sabotage-plagued northern pipeline to Turkey. Oil officials had said they did not want to resort to a third tender but would do so in the face of continuing uncertainties over sustained exports.

Iraq, which sits on the world’s second largest oil reserves, made its first post-war oil sales using crude oil from storage.

The Oil Ministry official said sabotage was still undermining efforts to export crude from the north, where a series of blasts has hit Iraq’s northern pipeline to Turkey.

Repairs on the pipeline were expected to be completed in about one week, he said. But Iraqi Oil Ministry officials fear that the explosions will continue as long as US occupation troops remain in the country. “I don’t think they (the saboteurs) will let us export from the north,” said the Oil Ministry official.

The official said Iraq was currently pumping at steady levels of 800,000 barrels per day (bpd), with 500,000 bpd for domestic consumption. “We will have a production capacity of 1.3 million barrels a day in about a week and we will have an export capacity of 750,000 barrels a day by the middle of August,” said the official. “But the question is how much will be able to export on a sustainable basis given the sabotage problems.” He said it was still not clear when and how much of that crude could be exported to market because of what he called political sabotage in the north and economic sabotage of oil facilities in the south.

“The saboteurs in the north are only targeting export pipelines because they want public opinion with them. But in the south it is economic sabotage,” he said. “You have people shooting holes in pipelines that are connected to refineries for domestic consumption. If it continues it could bring parts of Iraq to a standstill,” he said.

Meanwhile, Iraq will have a difficult transition to a market economy after a decade of economic sanctions and must make social reforms to protect the most vulnerable members of society, the World Bank and United Nations warned yesterday. “The main challenge is the security situation,” said Joseph Saba, the World Bank director for the Middle East. Iraq faces a “very difficult economic transition ... that must not be underestimated,” Saba told AFP on the sidelines of a conference in Baghdad of UN, World Bank and Iraqi officials.

“The real challenge is creating jobs. Fifty percent of the population is under 16 years. So how do you translate the growth into productive efficient employment? How do you create proper jobs for these young people?

“We have to be careful about our expectations because you don’t recover from 20 years of beating in one day,” Saba cautioned. Gross domestic product (GDP) per capita is estimated to have plummeted to $1,200 before the US-led war from over $3,300 in 1980, according to World Bank figures. “People have to feel secure and enjoy social welfare. These are challenges,” Saba said, adding that the “emphasis has to be on education and health.”

The World Bank, however, had not worked in a transitional country with as much wealth or as many qualified people as Iraq, Saba added, noting the state’s vast water and oil resources. But he warned that the “existence of resources alone in a transitional period will not provide successful job creation.”

UN special representative to Iraq Sergio Vieira de Mello warned that corruption and other vices of Saddam Hussein’s ousted regime could flourish in Iraq’s transition to a market economy and lead to “greater injustice.” “Fundamental ethical and human rights concerns must prevail,” Vieira de Mello said. “There is a real danger that corruption, a weak legal judiciary system leading to a lack of accountability, in-built distortions and vices of the previous system, (such as) unfair privileges, economic and social discrimination, would not only persist but flourish” during the transition.