May 20, 2012 / 10:51 AM / 5 years ago

UPDATE 2-Iraqi Kurdistan to push ahead with oil export plan

4 Min Read

* Kurdistan outlines oil export plans, defies Baghdad

* Kurdish crude shipments stopped over pay dispute

* Oil at heart of clash between Baghdad, Arbil (Adds more comments from Hawrami, background throughout)

By Ahmed Rasheed

ARBIL, Iraq, May 20 (Reuters) - Iraq's autonomous Kurdistan region said on Sunday it expects to start exporting its crude oil along a new pipeline to the Turkish border by August 2013, defying Baghdad in a long-running dispute over who controls the country's oil sales.

The Kurdistan region, which has its own government and armed forces, has already clashed with Iraq's central government over autonomy and oil rights, and halted its crude exports in April after accusing Baghdad of not making due payments.

"In August 2013 we will be able to directly export crude from the Kurdish region's fields," Hawrami said at an oil conference in Kurdistan on Sunday. "We will be responsible for exporting oil. It will still be Iraqi oil."

The dispute between Baghdad and the Kurdish capital Arbil is part of a broader political crisis in Iraq, where a fragile government amoung Shi'ite, Sunni and Kurdish blocs is struggling to overcome deep splits over power-sharing.

Baghdad says only the central government's oil authorities have the right to control oil exports, and dismisses contracts signed with the Kurdistan Regional Government as illegal, while the KRG says it has the right to develop its own oil fields.

Hawrami said once direct exports begin Kurdistan would take the 17 percent of revenues the region is allowed from Iraq's national budget and pass the rest to the federal government.

The minister said the first stage of the pipeline would be completed by October this year to carry crude from the Taq Taq oilfield. The second phase would connect to the Kirkuk-Ceyhan pipeline with a capacity of 1 million barrels per day by August next year though Turkey's port.

He said Kurdistan was also developing plans to build a separate pipeline that could connect to a refinery in Turkey's Ceyhan port by 2014.

"We envisage the building of a new pipeline taking Kurdish oil to Ceyhan port and there will be a large refinery ... Some of the oil will go to that refinery and additional oil will go to international market," he said.

Turkey, which shares a border with Kurdistan, has increasingly courted Iraqi Kurds as its relations with the Shi'ite-led central government in Baghdad have soured. Turkey is a major investment and trading partner for Iraq, especially for Kurdistan.

In its war of words with Baghdad, Kurdistan leaders have threatened to consider breaking away from the central government of Shi'ite Prime Minister Nuri al-Maliki, accusing him of attempting to consolidate power at the expense of the Sunni and Kurdish minorities.

Since the last American troops left Iraq in December the disputed areas between Kurdistan and Baghdad have been seen as a potential flashpoint for conflict as tensions between the two regions simmer without the buffer of a U.S. military presence.

Last month Kurdistan stopped oil exports because it said Baghdad was not fulfilling agreements to pay foreign oil companies working in the region. (Writing by Patrick Markey; Editing by Greg Mahlich)

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