* Neighbours sign up to 44 agreements
* Iraqi gas exports to Turkey to start at 8 bcm - min
* Talks held on PKK rebel group
(Adds Iraqi, Turkish PM comments)
By Pinar Aydinli
BAGHDAD, Oct 15 (Reuters) - Turkish Prime Minister Tayyip Erdogan and Iraqi premier Nuri al-Maliki on Thursday signed deals from energy co-operation to water sharing and fighting Kurdish rebels.
Relations between Ankara and Baghdad have been strained in the past by the presence of Kurdistan Workers Party (PKK) rebels who launch attacks on southeast Turkey from northern Iraq.
But trade and diplomatic ties have bloomed since the 2003 U.S.-led invasion of Iraq that ousted Saddam Hussein as regional heavyweight Turkey has sought to expand its influence in the Middle East under Erdogan’s Islamist-rooted AK Party government.
At a news conference with Maliki, Erdogan said trade between their countries was worth $5 billion, a figure he said he hoped to increase fourfold as soon as possible.
"A new stage has begun in our bilateral relations," Erdogan said through a translator.
European Union-candidate Turkey aims to position itself as a vital energy and trade corridor with its eastern neighbours, including Iraq, Iran, Syria and the South Caucasus.
Turkish and Iraqi officials signed more than 40 agreements, including a memorandum of understanding to transport Iraqi natural gas to Europe via Turkey, Turkish officials said.
While Maliki hailed strengthened ties with Turkey, he made no mention of the PKK, and said he hoped relations would be "far from interference in each others affairs".
Government spokesman Ali al-Dabbagh had earlier said the two countries had agreed to "respect each other’s sovereignty".
The comments could be a reference to Turkish military strikes against PKK rebels in northern Iraq, which usually involve shelling and airstrikes, but have also included land offensives, raising the ire of some officials in Baghdad.
However, Washington and Baghdad both consider the PKK terrorists, and Iraq has pledged to crack down on the group.
"We confirmed our steadfastness in ending the terrorism that threatens both countries," Erdogan said, referring to the PKK.
Agreements signed included one on security cooperation.
Other agreements focused on water sharing, transportation, health, agriculture, education and engineering.
Under international sanctions imposed on Saddam, trade between Turkey and Iraq choked to a trickle. Turkey’s complaint that Baghdad was doing little to crack down on PKK rebels also poisoned ties. But trade improved dramatically after the 2003 U.S.-led invasion of Iraq, with Turkish companies playing a leading role in reconstruction.
On Thursday, Turkish Energy Minister Taner Yildiz said Ankara would seek the involvement of Turkish firms in the construction of a 15,000-megawatt (MW) gas-fired power station Iraq wants to build. Iraq is expected to tender next month for $500-600 million of gas-fired power station projects, he said.
Iraq will also start natural gas imports to Turkey at a level of 8 billion cubic metres, Yildiz said.
Government sources said Iraqi gas would be sent on to Europe, which would add to Turkey’s plans to become a major regional energy hub for European supplies.
It was not clear whether the gas would go through the 7.9 billion euro European Union-backed Nabucco pipeline project, aimed to cut European dependence on Russian gas. Maliki said at a signing ceremony for the project in July that Iraq could supply 15 billion cubic metres of natural gas to Europe.
Turkish officials said the two countries also planned to extend an agreement over an Iraq-Turkey oil pipeline, complete new shared power lines and boost the capacity of existing ones.
In September, Turkey agreed to release more water from the Euphrates river to drought-ravaged Iraq, increasing the outflow to between 450 and 500 cubic metres per second until Oct. 20.
Months before that, Iraqi lawmakers agreed to block any pact signed with Turkey, Iran or Syria that did not include a clause giving Iraq a fairer share of water resources.
PKK rebels have been fighting for 25 years for an ethnic Kurdish homeland in southeast Turkey. Turkey has bombed PKK areas in north Iraq using U.S. intelligence and is believed to have greatly weakened the Kurdish guerrillas. Some 40,000 people have been killed in Turkey since the PKK took up arms in 1984. (Additional reporting by Waleed Ibrahim, writing by Ibon Villelabeitia and Thomas Grove; Editing by Janet Lawrence)