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Baghdad strikes deal with Kurds to restart Kirkuk oil exports

media An Iraqi oil employee checks pipelines at the Bai Hassan oil field west of Kirkuk on October 19, 2017 after Iraqi security units seized them from Kurdish peshmerga forces AFP

Iraq's central government has agreed with Kurdish authorities to resume oil exports from Kirkuk, the oil ministry said Friday, a year after federal forces seized the lucrative fields.

Iraqi security units took the fields from Kurdish forces in October 2017, in retaliation for a controversial independence referendum in the Kurdish region.

But since the pipeline to neighbouring Turkey ran through Kurdish-held territory, there was no way to take significant sums of oil out of Kirkuk, so exports stopped.

On Friday, oil ministry spokesman Assem al-Jihad said Baghdad and Arbil had agreed on restarting them.

"The federal government and the government of the Kurdish (autonomous) region of Iraq reached a preliminary agreement to resume oil flows starting today from the Kirkuk fields through the KRI's pipeline to the Ceyhan port in Turkey," he told AFP.

He said between 50,000 and 100,000 barrels per day (bpd) would be exported through the Kurdish pipeline.

A source from the state's North Oil Company confirmed that oil had begun pumping out of Kirkuk at 10:00 am (0700 GMT) on Friday morning, describing it a test.

"It began as an experiment with 50,000 bpd and will later reach an average of 80,000 bpd," the source added.

The Kirkuk fields have changed hands several times in recent years in a tug-of-war over one of Iraq's most oil-rich regions.

The Kurds took Kirkuk in 2014, as the Islamic State group swept across parts of Iraq's north, and began exporting to Turkey from there through their own pipeline at around 420,000 bpd.

Last year, federal forces seized the fields but could only take around 30,000 bpd out by tanker truck to Iran.

The federal government had pledged to renovate their own parallel pipeline, but experts said it would take two years.

The announcement is one of the earliest victories for Iraq's new Prime Minister Adel Abdel-Mahdi, a previous oil minister known for his good relations with Kurdish authorities in Arbil.

It also comes less than two weeks after Washington re-imposed sanctions on Iran's oil, energy and finance sectors.

Baghdad was granted a 45-day waiver from the sanctions as long as it came up with a plan to wean itself off of Iranian-imported gas and electricity.

Iraq is OPEC's second-largest oil exporter at 4.5 billion bpd. Oil exports make up almost the entirety of the government's revenue, bringing in $8.5 billion last month.

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