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imageLONDON: Iraqi Kurdistan will start a new oil pipeline to Turkey within months, its energy minister said, increasing the autonomous region's control over its resources in a dispute with Baghdad and raising its exports to world markets.

In a move that will provoke Baghdad, the Kurdish regional government will complete the pipeline by the end of September with an initial capacity of 300,000 barrels per day (bpd), its energy minister, Ashti Hawrami, told a conference in London on Wednesday.

Oil is at the heart of the dispute between the Arab-led central government and the ethnic Kurdish-run northern enclave over control of oilfields, territory and crude revenues shared between the two regions.

Kurdistan has stopped exporting through the central government-controlled pipeline, which has stranded its oil output. It has been able to truck only small amounts to Turkey on road tankers.

"Nowhere in the world does 1 million barrels per day remain stranded, so I'm confident that Kurdistan's exports via pipeline will be a reality very soon," Hawrami said.

Kurdistan's oil production capacity is now at 300,000 bpd and is rising rapidly to 400,000 bpd by the end of this year, most of it destined for export, he added.

Sales of Kurdish oil via the central government through Iraq's federal pipeline system also could resume but that will depend on a permanent resolution of the political and constitutional issues between Arbil and Baghdad, Hawrami said.

No agreement has been reached so far between Iraq and Kurdistan on payments to oil companies working in the region, despite a meeting earlier in June between leaders on both sides.

Hawrami stressed the benefits of having a direct pipeline.

"The new export infrastructure will be a cost-effective and secure solution that will enable more of Iraq's oil and gas to reach the international market, which will allow all the citizens of Iraq to benefit from increased revenue," he said.

With the further construction of new pumping stations, the pipeline would be able to export more than 1 million bpd by the end of 2015 and 2 million bpd by 2019, Hawrami said.

Genel Energy said in February it expected to export oil by pipeline from its fields in Iraqi Kurdistan by 2014. Turkish sources said in April that the KRG was on track to finish the pipeline in the third quarter.

Turkey has given the green light to the plan, under which Kurdish oil will enter the Kirkuk-Ceyhan pipeline at the Fishkhabur pumping station near the Turkish border, from where it will flow directly to Turkey's southern port of Ceyhan for shipping to international markets, the sources said.

The prime ministers of Iraq and the KRG met last week in Arbil, the Kurdish capital, and agreed to set up committees to focus on Iraq's oil and gas law and revenue-sharing legislation, but made little progress on substantive issues.

"There was no discussion about oil payments Our dispute is constitutional, we are looking at the big picture," Hawrami said.

The KRG will also seek to export natural gas to Turkey and elsewhere in Europe once domestic needs are met, Hawrami said.

"By 2016, I believe, we will have first exports of gas for the Turkish grid," he said.


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