UPDATE 1-Iraq, Iran consider building pipeline to export Kirkuk crude

(Adds details, background)

BAGHDAD, Feb 20 (Reuters) - Iraq and Iran signed a memorandum of understanding on Monday to study the construction of a pipeline to export crude oil from the northern Iraqi fields of Kirkuk via Iran, the Iraqi oil ministry said in a statement.

The agreement, signed in Baghdad by the oil ministers of the two countries, also calls for a commission to solve a conflict about joint oilfields and the possible transportation of Iraqi crude to Iran’s Abadan refinery, it said.

The pipeline would help Iraq diversify the export routes of crude produced in Kirkuk and reduce its reliance on transit through the Kurdish Region Government’s territory.

Baghdad has a troubled relationship with the Kurdish authorities that control the route of the existing pipeline from Kirkuk to the Turkish Mediterranean port of the Ceyhan.

The flow of Kirkuk crude was interrupted for several months last year as the Iraqi government disagreed with the Kurds on their share in the national oil revenue and budget.

Iraqi Oil Minister Jabar al-Luaibi said in the statement that he also agreed with visiting Iranian counterpart Bijan Zanganeh to cooperate on the policies of the Organization of the Petroleum Exporting Countries.

The two neighbours are OPEC’s second- and third-largest producers after Saudi Arabia. Iraq produces and exports most of its crude from the southern region. (Reporting by Maher Chmaytelli; editing by Jason Neely and Susan Thomas)