Saudi Arabia said yesterday it seized ownership of an Iraqi crude oil pipeline that crosses its territory and has been shut down since Baghdad's 1990 invasion of Kuwait.

The move is certain to increase tensions between the two Gulf neighbours, stirred up last week by Saudi allegations that Iraq has staged a series of raids on Saudi border outposts in recent months.

Saudi Arabia, in a letter to UN Secretary-General Kofi Annan, said it was taking over the pipeline because Iraq had made threats against it and committed aggression, "thereby causing serious damage to the Saudi people in terms of lives and property, as well as to natural resources and the environment." It did not offer specifics.

Because of this, it said the pipeline - including pumping stations, storage tanks, communications system, loading facilities and a maritime terminal at the Red Sea port of Mu'jiz - "will revert in its entirety to the government of Saudi Arabia." The seizure took effect last Thursday.

The Iraq-Saudi pipeline cost at least $2.25 billion to build and had the capacity to bring 1.6 million barrels per day to the Red Sea. It had been in full operation less than a year, from September 1989 until August 13, 1990, alternately carrying Saudi and Iraqi crude to the Red Sea for export, when it was shut down.

Saudi Arabia disconnected the pipeline and blocked both ends after the UN Security Council imposed sanctions on Iraq for its invasion of Kuwait. Iraq last September asserted Saudi Arabia owed it unspecified damages for shutting down the pipeline.

But in the letter to Annan, Saudi Arabia said Iraq could deduct any damages from the money due Riyadh "for the damage resulting from the Iraqi aggression." Sorting out the damage claims from the 1991 Gulf War is the work of the Geneva-based UN Compensation Commission.

Saudi Arabia last week accused Iraq of staging 11 raids on Saudi border outposts in March, April and May and warned the Security Council more such attacks could have "grave consequences." But Iraq's UN ambassador, Mohammed Aldouri, wrote Annan in a letter circulated yesterday that Saudi Arabia had fabricated the charges to build support for efforts by Britain and the United States to overhaul the UN sanctions on Iraq.

Washington and London hope to revise the UN oil-for-food programme, an exception to the sanctions imposed on Iraq in 1990, by easing controls on civilian goods imported by Iraq while tightening restrictions on military-related supplies and clamping down on smuggling.

The program, renewed for one month last week in hopes new measures could be adopted by July 3, allows Iraq to sell oil and order food, medicine and other goods under U.N. supervision.

Iraq last week halted oil exports in protest of the initiative. Baghdad wants the sanctions lifted or at least made ineffective and objects to any system that would perpetuate them. Aldouri, in his letter, said Iraqi border guards insisted there was no truth to the Saudi charges of cross-border raids.