* Link from Kirkuk to Kurdish pipeline needs tests
* Kurdistan borrows $3 billion to meet budget
* Region to raise oil product imports on refinery outage
* Iraq's largest refinery shut down, militants take over
(Recasts lead, adds detail, context)
By Julia Payne
LONDON, June 18 Barely a week after Iraqi
Kurdistan took over the Kirkuk oil field, Iraqi oil officials
seemed resigned to its loss when they joined their Kurdish
counterparts at a London industry conference.
Instead of tough messages over ownership of the prized giant
field, the Iraqis sparred with the Kurds over pipeline
logistics, as though the change of affairs was now the status
The Kurdish Minister of Natural Resources, Ashti Hawrami,
announced the completion of a new pipeline link on Tuesday,
which could be used to export Iraq's Kirkuk oil through its
In response, Iraqi officials cast doubt over the existence
of the link and stuck to their line that the Kurds of the
semi-autonomous region had no right to export oil independently.
But their legal threats have been falling on deaf ears as
refiners have already brought Kurdish oil, which has been
trucked through Turkey.
"Kurdistan of Iraq is already on its national desired border
and I don't think it will be easy to push back," Adnan
al-Janabi, a senior Sunni politician and head of Iraq's oil and
gas committee said on the first day of the conference.
The Kurds see Kirkuk as their historic capital.
"The Peshmerga is on Kurdish territory and there is no
reason to get them back," Taha Zanghana, deputy minister of
natural resources of Iraqi Kurdistan, told reporters on
Wednesday, speaking of Kurdish forces around Kirkuk.
Kirkuk oil has been largely trapped in Iraq after its export
pipeline to Turkey was sabotaged in March and the Sunni
extremist onslaught makes repairs hazardous.
The Kurdistan Regional Government (KRG) still needs Baghdad.
Its small oil sales by truck and its pipeline exports from its
own pipeline, which began in May, will not cover its financial
needs for a while.
After the KRG completed the pipeline to Turkey by-passing
the federal system, Baghdad cut the Kurds out of the budget for
the last five months, forcing the northern region to take out
large loans to stay afloat.
Ashti Hawrami, the Kurdish minister of natural resources,
said the KRG had already borrowed $1 billion internationally
against future oil sales and another $2 billion locally.
BAIJI REFINERY ATTACK
The Kurds said the new pipeline announced on Tuesday was
built with the cooperation of Iraq's North Oil Company, which
runs the field, and once operational it would allow oil flows to
link up with the Kurdish pipeline to Turkey.
But it still needed to be tested, Zanghana said.
Kurdish officials at the conference were unable to comment
on capacity or give greater detail on the connection to its
pipeline to Turkey.
The pipeline could start quickly, Zanghana added, but the
region was waiting for an agreement with Baghdad.
Thamir Ghadhban, the chairman of the advisory commission to
the prime minister, said that the Kurdish energy minister's
announcement was the first he had heard of such plans.
Early on Wednesday, Sunni Muslim militants began attacking
Iraq's largest refining complex at Baiji and now control 75
percent of the complex. The plant was shut down on
Some output from the refinery was sent to the Kurdish
region, which will now have to make up for the loss.
"We were expecting that case, and we made all the
preparations to supply our local demand ... It's not the first
time it has been shut down or they cut our supplies," Zanghana
"We are importing products and we are swapping products for
diesel and fuel oil. I think it will not be easy for us, I got
calls from our distribution centres...but I'm confident that we
will tackle that case."
(Editing by William Hardy)