UPDATE 2 -Iraq central gov't, Kurdistan agree oil exports

Thu Nov 27, 2008 2:40pm EST

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By Mohammed Abbas

BAGHDAD Nov 27 (Reuters) - Iraq's oil ministry and the country's largely autonomous northern Kurdish region have agreed to export oil from Kurdistan to Turkey, an Oil Ministry spokesman said on Thursday.

The initial agreement represents a breakthrough in a dispute between the two Iraqi authorities. Disagreement between the Baghdad central government and the Kurdistan Regional Government has held up development of oilfields for export.

"There has been an initial agreement to export Iraqi oil from the Tawke oil field," Iraqi Oil Ministry spokesman Asim Jihad said.

Exports of 100,000 barrels per day are expected to begin from the Tawke oil field, where Norwegian oil firm DNO (DNO.OL) has a concession, at the beginning of next year, KRG Natural Resources Minister Ashti Hawrami said.

Tawke is expected to be connected to Iraq's main northern export pipeline, which reaches the Turkish port of Ceyhan, by the end of this year. A second Kurdistan oil field, Taq Taq, is due to be linked to the pipeline three to four months later, Harami said.

Exports from Tawke and Taq Taq combined are expected to reach 250,000 barrels per day by the end of next year, he added.

The right to sign oil deals with foreign oil firms has been a sore point between the KRG and the central government. Baghdad does not recognise deals the KRG signed without its consent.

Earlier on Thursday, South Korea's SK Energy (096770.KS) said it would not raise investment in Kurdistan without central government approval.

The firm is a member of a consortium developing the region's Bazian oil field. It said it would not join a separate $2.1 billion oil-for-infrastructure package that Korea National Oil Corp signed with the KRG in September.

An oil law, which could help ease the passage of foreign deals, has been held up by its link to other legislation contended by the KRG and the central government. Tensions have appeared to rise between the two authorities in recent months as they struggle to assert their authority.

Iraq's oil minister met with KRG officials on Monday to discuss the disputed foreign contracts and they agreed to link the Ceyhan pipeline to two Kurdish oil fields.

Iraq has the world's third-largest proven reserves, at around 115 billion barrels. In the absence of an oil law, Baghdad has been negotiating contracts with oil majors under old laws. (Additional reporting by Shamal Aqrawi in Arbil: Editing by Dan Grebler)

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