Baghdad had received "positive signals" from both companies that they would consider making an offer, the official added.

The sale of the stake to either company,if it goes through, would significantly strengthen the position of Russia and China in exploiting Iraq's oil reserves, the world's fourth biggest.

Exxon has informed Baghdad it wanted to pull out of the $50 billion West Qurna 1 project to focus on its deal for exploration blocks in Iraq's autonomous Kurdish region.

The sale of the stake to either company, if it goes through, would significantly strengthen the position of Russia and China in exploiting Iraq's oil reserves, the world's fourth biggest.

"During two separate meetings with executives from CNPC and LUKOIL, Iraq informed the companies that it favours their contribution to purchase Exxon's share in West Qurna-1 oilfield," the official told Reuters.

Baghdad rejects contracts signed between foreign oil companies and the Kurdistan regional government (KRG) as illegal and told Exxon it had to choose between working in southern Iraq or Kurdistan.

The U.S. oil major opted to stick with Kurdistan, where the contracts are seen as more lucrative.

"We have received positive signals from both CNPC and Lukoil that they will consider purchasing Exxon's stake in West Qurna-1," said the official on condition of anonymity.

Earlier this week, deputy prime minister for energy Hussein al-Shahristani said Iraq was in the advanced stages of talks with potential buyers to take on West Qurna and there were enough appropriate candidates.

Lukoil, Russia's second largest crude producer, was quoted by Interfax news agency as saying last week that it would study an offer from Exxon to take over the field.

The Russian company, which is already developing West Qurna-2, had previously said West Qurna-1 is "too big for it to swallow", but last week said it would look into the proposal.

The World Energy Outlook 2012 released Monday by the Paris-based IEA also predicts that greater oil and natural gas production as well as rising energy efficiency will allow the U.S., which currently imports around 20 percent of its energy needs, to become nearly self-sufficient by around 2035.

The IEA says rebounding U.S. oil and gas production and increasing light tight oil and shale gas resources are “steadily changing the role of North America in global energy trade” and will speed up the change of direction of international oil trade from the Middle East toward Asia.

Details of the timeframe or companies involved were not immediately available.

Turkey's growing energy involvement in Iraq comes despite tensions with Baghdad over Ankara giving refuge to Iraq's fugitive Vice President Tareq al-Hashemi, who was sentenced to death by an Iraqi court for a second time on Thursday.

Iraq has also asked Turkey to stop attacking Kurdish rebel forces sheltering across the border in northern Iraq, a Kurdish autonomous region over which Baghdad has little control and with which Ankara has forged close ties in recent years.

"We are continuing work with the central government on opening 7,000 wells across Iraq as a whole," Yildiz told a news conference in the Turkish capital.

He also told reporters talks were being held with the Turkish treasury on holding initial public offerings (IPO) for state-owned oil firm TPAO and state pipeline company Botas, with a TPAO offering planned first.

Separately, Yildiz warned that the government would review Italian energy firm ENI's investments in Turkey if it went ahead with plans to explore for natural gas in Cyprus.

Cyprus said on Tuesday it would start negotiations with ENI, South Korea's Kogas, France's Total and Russia's Novatek on the potential development of natural gas fields off the Mediterranean island.

Turkey, which has been at diplomatic loggerheads with Cyprus for decades, claims the island has no authority to explore for gas offshore.

"If ENI becomes involved in exploration in southern Cyprus we will sit down and think about its investments in Turkey," Yildiz said.

The negotiations would cover four offshore blocks lying south and southeast of the island, and close to a gas find last year for which U.S. based Noble Energy already has concessions over.

Yildiz also said official Syrian sources have sought the renewal of electricity supplies from the Turkish private sector and said electricity could be supplied as a form of humanitarian aid if the private sector renews its contracts with Turkish state authorities.

He added that Turkey plans to produce 36 tonnes of gold in 2013 to meet half of its total gold imports. In 2011 as a whole, gold imports amounted to 79.70 tonnes, almost doubling from 42.49 tonnes a year earlier.

This comes after the holding of the Kurdistan region deals with foreign oil companies such as "Exxon Mobil" and "Chevron" Americas and "Total" French without referring to the Iraqi central government, infuriating Baghdad which was considered such contracts illegal. According to the reports , Iraq is studying to go to my company "Lukoil" and "Gazprom oil" two Russian operative in Iraq to replace Western companies mentioned. / end / t. St. /

Exports have been up and down so far this year, but have never dropped below 2 million bpd. Oil sales totaling $7.5 billion in July pushed Iraq's 2012 revenues to $52.94 billion.

"The exports achieved from Basra are 2.216 million bpd," said Falah al-Amri, director general of the State Oil Marketing Organization.
 

The source told "Shafaq News", that "a fire broke out in the oil pipeline that extends from Kirkuk to Turkey, specifically in Mardin province."

He added that "the Turkish side told us that the fire was caused by a sabotage act after planting explosives near the pipe and blown it up."

Iraq's autonomous Kurdistan region, which borders Turkey, is locked in a dispute with the central Iraqi government over oil exports and energy policy has become a very sensitive topic.

Turkey said on Friday it had begun importing 5 to 10 road tankers of crude a day from the northern region of Iraq and the volume could rise to 100-200 tankers per day.

"Exporting oil from Kurdistan to Turkey is illegal and illegitimate," Iraq government spokesman Ali al-Dabbagh said in a statement.

He said that the oil is the property of all Iraqis and that any exports and revenue collection should be organised by the central government.

"Turkey, in doing this, is participating in the smuggling of Iraqi oil and putting itself in a position which we don't wish from a neighbor with which we have broad and large interests," he said.

"This issue will influence the relationships between the two countries, especially economic ones, which will be harmed."

A Kurdistan regional government source said last week that it had sent a small amount of oil to Turkey by trucks in exchange for diesel, adding it needed the refined product to run power stations.

Ankara has increasingly courted Iraqi Kurds as its relations with the Shi'ite-led central government in Baghdad have soured. Turkey is a major investment and trading partner for Iraq, especially for Kurdistan.

The Kurdish government source said last week Kurdistan was not getting enough of the refined product under supplies controlled by the central Iraqi government, making the trade with Turkey necessary to fill the gap.

Kurdistan infuriated Baghdad last year by signing production sharing contracts with U.S. group Exxon Mobil. A provincial governor said earlier this month he would also like to enter into talks with Exxon, the world's largest publicly traded energy company.

Iraq will also sign an initial contract with a consortium led by Kuwait Energy for oil Block 9 on Monday and a deal to explore oil Block 10 will be signed with a group led by Russia's Lukoil on Tuesday, the news agency added..

Pakistan Petroleum, Kuwait Energy and Lukoil won their bids in May at Iraq's fourth energy auction, which had a poor showing because of tough contract terms drawn up by Baghdad.

Iraq has offered foreign companies less attractive service agreements where they are paid a fee rather than production-sharing deals that allow them to profit jointly from the output.

The country is slowly rebuilding nine years after the US-led invasion that toppled dictator Saddam Hussein. Officials say it needs foreign investment in virtually every sector to improve its infrastructure.

The link, stretching from Abu Dhabi to Fujairah on the Gulf of Oman, began loading a shipment of about 500,000 barrels, Mohamed Al-Hamli, oil minister for the United Arab Emirates, said yesterday at the inauguration ceremony. International Petroleum Investment Co. spent $4.2 billion building the 423- kilometer (263-mile) link, Managing Director Khadem al-Qubaisi said at the ceremony in Fujairah.

Abu Dhabi, the U.A.E.’s capital and holder of more than 90 percent of its oil, built the export route for crude to avoid Hormuz, a narrow waterway carrying a fifth of the world’s traded oil that Iran has threatened to block in retaliation for sanctions targeting the country’s nuclear program. Construction costs were 27 percent higher than the $3.3 billion contract awarded to China Petroleum Engineering & Construction Corp. in 2008 and was delayed by 11 months.
 

“The pipeline will get used if they keep the price to load crude from Fujairah the same as loading from inside the Gulf,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management. “It means that Abu Dhabi is just swallowing the cost of the pipeline, as it has been built for strategic reasons. If this was a commercial venture, they would have built it years ago.”
 

Political Maneuvering
 

An Iranian lawmaker, Mohammad-Hassan Asferi, said yesterday the pipeline’s limited capacity would keep it from obviating the need of regional suppliers to export most of their oil through the strait. The line is “propaganda and political maneuvering guided by the Western countries, especially the United States, which aims to reduce the strategic importance of the Strait of Hormuz,” according to state-run Press TV. Asferi serves on Iran’s national security and foreign policy committee.
 

The link can transport 1.5 million barrels a day of Murban crude from Habshan, a collection point for Abu Dhabi’s onshore oil fields, across a desert and mountains to Fujairah. The system can pump as much as 1.8 million barrels a day at periodic intervals, officials said yesterday. The U.A.E., the fifth- biggest oil producer in OPEC, pumped 2.61 million barrels a day in June, data compiled by Bloomberg showed.

The first oil exported from Fujairah is priced the same as Murban crude loaded inside the Gulf, three people with knowledge of the matter said this month. Abu Dhabi may later devise a separate formula including a premium to account for the cost of using the pipeline, said the people, declining to be identified because the matter is confidential. Abu Dhabi officials yesterday did not comment on pricing.

First Cargo
 

Abu Dhabi’s first export cargo from Fujairah is destined for Pak Arab Refinery Ltd., a joint venture between Pakistan’s government and IPIC, Al-Qubaisi said. IPIC owns a 40 percent stake in the plant, which regularly uses about 40,000 barrels a day of Abu Dhabi crude, of the 100,000 barrels it consumes daily, he said.
 

Abu Dhabi earlier shipped a test cargo from Fujairah to its own refinery at Ruwais, inside the Persian Gulf, said Abdul Munim Al-Kindi, general manager of Abu Dhabi Co. for Onshore Oil Operations. As the main oil producer at the emirate’s onshore fields, the company, known as Adco, will operate the pipeline and gradually ramp up capacity by year-end, he said. The network is designed to load tankers at three offshore buoys, he said. IPIC will likely charge Adco “a few cents per barrel” for use of the pipeline, Al-Qubaisi said.

Alternative Route

Al-Hamli, the oil minister, said the link gives buyers an alternative location from which to receive crude. It will allow them to fill very large crude carriers, or VLCCs, the largest class of tanker capable of carrying 2 million barrels of oil. Filling such vessels in the Gulf of Oman will reduce shipping traffic in Hormuz, he said.
 

“The pipeline is going to be beneficial because our clients will be able to lift bigger cargoes,” he said. “Currently you can only lift 1 million barrels a day from Ruwais. From Fujairah now our clients now can bring in VLCCs and lift more.”
 

IPIC’s al-Qubaisi said his company plans to $4 billion to $5 billion to build a refinery in Fujairah with a capacity of about 250,000 barrels a day to produce for local sale and export, further enhancing the port’s importance as a hub for the processing, storage and shipment of fuels. The company said in a bond prospectus in October the refinery would produce 200,000 barrels a day at a cost of about $3.5 billion.

IPIC is working with another state-owned investment fund, Mubadala Development Co., on a project for a terminal at the port for imports of liquefied natural gas. Fujairah is already among the world’s three biggest refueling ports for commercial ships, along with Singapore and Rotterdam. Fujairah is one of the U.A.E.’s seven sheikhdoms.

Turkey, which relies on Iran for half its crude needs, has already cut imports of Iranian oil by a fifth from average levels of 2011 to win waivers from U.S. sanctions.
 

But volumes will now likely fall much steeper as Turkish main refiner Tupras cannot import Iranian oil on Turkish tankers after European Union sanctions against Tehran stopped the region's firms, which dominate the marine insurance sector, from offering cover on Iranian crude.
 

"Tupras was lifting Iranian crude with its own tankers up until July… This is no longer possible… They are now focusing more on lifting from Libya, Saudi Arabia and Iraq with its tankers," said a Turkey-based shipping source.
 

Turkish Energy Minister Taner Yildiz told reporters on Friday Tupras's crude purchases from Iran were continuing without any problems, but gave no details. Tupras declined to comment.

Industry experts say the ship insurance ban has proved to be the hardest hitting in the West's arsenal of sanctions aiming to persuade Iran, which relies on oil for more than half its budget revenues, to abandon its nuclear programme. Iran denies its nuclear programme is aimed at making weapons.
 

The lack of shipping cover has already disrupted flows of Iranian oil to Tehran's major customers in Asia — China, India, South Korea and Japan — at a time when the EU has stopped buying its oil altogether.
 

The measures are costing Tehran over $3 billion a month as its crude exports are estimated to have halved to 1.1 million bpd in the past months.
 

Turkey, which is among Iran's top five customers, is estimated to have imported around 160,000 barrels per day of Iranian oil in May. Of this amount, more than 100,000 bpd was brought in from the Egyptian port of Sidi Kerir on board Turkish tankers and the rest on Iranian tankers through the Suez Canal.
 

"They (Turkish ships) are told to avoid the Sidi Kerir route as much as possible," the Turkish source said.
 

Sidi Kerir on the Mediterranean coast is connected by Sumed pipeline to the Ain Sukhna terminal on the Gulf of Suez, bringing oil from Iran, Saudi Arabia and Egypt for European markets.
 

"We understand some 7 million barrels of Iranian oil is now available from Sidi Kerir and we are hearing offers to buy it," one trading source said. Other trading sources confirmed they had seen several offers from little known traders.
 

Egyptian officials were not available to comment on stocks at Sidi Kerir.

BANKS IN FEAR OF BREACHING SANCTIONS

Iran said this month it had set up a consortium that could export 20-30 percent of its crude oil, performing a task which up until now was solely entrusted to the National Iranian Oil Company (NIOC).

"I'm sure we will see attempts to sell this oil to non-EU countries. But it will be very difficult because of sanctions," said one trading source.

Another said the main problem would be banking because of fear in the financial industry of running foul of the sanctions.

"I was unable to make a banking transfer the other day to a ship broker in Europe just because his initials were IR. Banks are scared of sanctions to death and will be policing very hard any deal involving oil from Sidi Kerir," he said.

Trade between Turkey and Iran has risen sharply over the past decade, and Turkey was regarded as a possible weak link in the international sanctions against Iran due to a long history of close relations between the neighbours.

Relations, however, were strained by Tehran's support for Syrian President Bashar al Assad, while Turkey sided with Syrians who joined in the popular revolt against his rule.

The Centre for Global Energy Studies (CGES) estimates Iran will be able to generate $42 billion this year from oil revenues, a massive decline from an all-time high of $73 billion in 2008 and $72 billion in 2011.