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Iraq Sells 4 Million Barrels Kirkuk Oil to Exxon, Tupras

Sun Jun 25, 2006 10:06 AM ET

(Adds oil ministry official comments, background)

DUBAI, June 25 (Reuters) - Iraq has sold 4 million barrels of Kirkuk crude to U.S. oil major Exxon Mobil and Turkish oil refiner Tupras <TUPRS.IS>, the first exports from its troubled northern Kirkuk fields in nearly a year.

Iraq's state oil marketer SOMO said in a statement that both companies would take 2 million barrels each. It gave no further details and SOMO officials were not immediately available for comment.

Iraq on June 19 issued its first tender since last August to sell 6 million barrels of Kirkuk, loading between June 27 and July 1.

Iraq is aiming to sustain crude exports from its giant Kirkuk oilfields and hopes to issue a second sales tender at the end of next month.

Shamkhi Faraj, director general of marketing and economics at Iraq's ministry of oil, said that stocks of Iraqi crude at the Turkish port of Ceyhan were now at more than 7 million barrels. Ceyhan tanks can hold up to eight million barrels.

"So far, so good. If it continues at this rate, we will have to have contracts instead of tenders," Faraj told Reuters by telephone.

SOMO has been forced to hold infrequent sell tenders only after sufficient oil has been pumped from its Kirkuk oilfields to the terminal of Ceyhan.

Tenders to sell crude from the Kirkuk field have been rare since the U.S.-led invasion in 2003 as a result of frequent sabotage along the Iraq-Turkey pipeline.

The last tender was in August 2005, in which Iraq awarded up to three million barrels of Kirkuk crude to UK major BP, Spain's Cepsa and France's Total.

Prior to the war, Iraq was exporting steady Kirkuk volumes of at least 700,000 barrels per day (bpd) from Turkey.

With the sale of the 4 million barrels of Kirkuk crude, Baghdad would boost overall exports by around 130,000 bpd in July. Total exports stood at 1.5 million bpd in May.

Iraq has been relying almost exclusively on southern exports of Basra Light crude from its own Gulf terminal.

Iraq resumed sporadic flows along its northern oil pipeline earlier this month after a four-month halt. The export route is still beset by problems, so technicians are collecting batches of about 400,000 barrels, then injecting them down the pipeline.

Analysts say real progress towards reliable supply of Kirkuk crude hinges on violence abating in the country that has been battling an insurgency against U.S.-led forces and the Iraqi government as well as sectarian bloodshed.