Heating organic compound in a stream of nitrogen gas
This is a strangely written text. In a practical setting, the way to get oxygen concentration is by sending an organic sample to a lab for an ultimate analysis.  The ultimate analysis chemistry is explained elsewhere.  

The highlighted text seems to describe anoxic pyrolysis of organic matter well above 450°C (for coals this temperature may be higher).  Pyrolysis proceeds as follows.

$$\ce{Organics -&gt;[heat]  syngas + tar + char  }$$

If any molecular oxygen were present in the system these two reactions would very quickly happen.
$$\ce{Organics + O_2 -&gt;[heat]  2CO }$$
$$\ce{2H^+ + O_2 -&gt;[heat]  H_2O }$$

The syngas contains elemental oxygen mostly in the form of $CO$ and $H_2O$, however, other gasses like $CO_2$, $H_2S$, and perhaps even other hydrocarbons may be present.  For the sygas to have most of the elemental oxygen as opposed to the char or tar phase high temperatures exceeding 450°C is important.   

If the syngas containing the volatilized matter is passed over a bed of hot coal around 900°C then several things happen.


Complex particles break down (hence the lysis in pyrolysis.)
The gas stream picks up elemental carbon from the bed of hot coal.
$$\ce{CO_2 + C -&gt;[heat]  2CO}$$
$$\ce{H_2O + C -&gt;[heat]  H_2 + CO}$$


By this point, if the temperature is hot enough, all but perhaps an insignificant fraction of the elemental oxygen will convert into $CO$.         

Testing for $CO$ is done with the iodine pentoxide test.