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U.S. Senate asked to hold hearing on Iraq oil output

WASHINGTON, Dec 17 (Reuters) - The U.S. Senate was urged Thursday to hold hearings on Iraq's ability to increase its oil production while not complying with United Nations resolutions,

``We need to take a serious look at Iraq production levels and U.S. policy towards production,'' Senators Don Nickles and James Inhofe, Republicans from Oklahoma, said in a joint letter to the chairmen of the Senate's Energy Committee and Foreign Relations Committee.

``We should not continue to tolerate increased production from Iraq, particularly in light of its continuing refusal to comply with post-war obligations,'' the senators said.

The Oklahomans said it was ``outrageous'' that Iraq has been allowed to increase its oil output under a U.N. programme that permits the country to export oil to buy food and medicine.

Nickles and Inhofe want the two committees to hold a joint hearing on the issue shortly after the Senate reconvenes in January.

Iraq produces about 2.6 million barrels a day, a level the senators said is almost equal to the country's crude output before it invaded Kuwait in August 1990.

The lawmakers also blamed Iraq's increased crude production for contributing to low world oil prices, which they said have harmed U.S. energy producers.

Although Oklahoma diversified its economy after the oil bust of the 1980s, its state coffers still get hurt when crude oil prices plunge. In November, Oklahoma state officials said general revenue fund collections for October fell 2.1 percent below official estimates due to low oil prices and output.

The senators said it added ``insult to injury'' that the United States has increased its Iraqi oil imports.

Iraq was the fifth biggest supplier of oil to the United States during October, shipping 20.1 million barrels or 8 percent of total U.S. oil imports for the month, according to the latest trade numbers from the U.S. Energy Department. Each barrel holds 42 gallons.

``As our dependence on (oil) imports from foreign countries grows, so does our national security risk,'' the senators said.

Under the U.N. oil-for-food programme, which started in December 1996, Iraq is permitted to sell up to $5.256 billion of crude every six months. However, the country has been able to sell only about $3 billion during the period because of damage to its oil facilities suffered in the 1991 Gulf War.