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UPDATE 1-Turkey says mindful of Iraqi concerns on Kurdish oil projects

Friday, 1 Nov 2013 | 9:08 AM ET

* KRG, Baghdad at loggerheads over oil production contracts

* Turkey says won't allow shipments without Baghdad approval

(Adds quotes, background)

ANKARA, Nov 1 (Reuters) - Turkey will not import energy from Iraq without the approval of the federal government in Baghdad, aware of its concerns after the autonomous Kurdish region said it would build a second oil pipeline to Turkey, Energy Minister Taner Yildiz said on Friday.

Kurdish-built pipelines, by offering a route to Western markets that bypasses national infrastructure, may encourage northern Iraq's Kurdistan Regional Government (KRG) to seek greater independence from Baghdad, with which it has been at loggerheads over oil-production contracts and revenue sharing.

"Turkey is aware of Iraq's concerns... and has given its guarantee that it will not permit any kind of oil shipments without the approval of the federal government in Baghdad," Yildiz told reporters, adding Turkey did not want to violate its existing energy agreements with Baghdad.

The KRG has been shipping small amounts of crude to Turkey overland by truck since 2012.

Baghdad has repeatedly warned any Turkish deals with the hydrocarbons-rich KRG may breach its agreements with Iraq.

A pipeline built by the KRG is already complete and is being tested before it begins carrying oil in early 2014.

Ashti Hawrami, the KRG's natural-resources minister, said on Thursday in Istanbul the region now wants to build a second link with Turkey as it targets production of 3 million barrels of oil per day eventually for export.

The second link is expected to run parallel to the ageing Kirkuk-Ceyhan pipeline administered by Baghdad.

Yildiz also said Turkey wants to boost energy cooperation with Baghdad, including raising capacity on the outdated Kirkuk-Ceyhan crude pipeline and building a new link.

The ageing double-pipe Kirkuk-Ceyhan is operating at a fraction of its capacity and is regularly knocked out of service by sabotage or technical faults.

"Increasing all of Iraq's revenue is among Turkey's aims. As long as political borders remain intact, Turkey is seeking to expand its energy parameters in every country," Yildiz said.

Turkey, with little hydrocarbons of its own, has boosted trade links and energy cooperation with the neighbouring Kurdistan region of Iraq, raising the ire of Iraqi Prime Minister Nuri al-Maliki.

But Ankara may now be seeking to mend fences with the federal government in Baghdad, and its ally Tehran, as the crisis in Syria drags on. On Friday, the foreign ministers of Turkey and Iran met in Istanbul and signalled a thaw in their relationship over concerns about Syria.

(Reporting by Orhan Coskun; writing by Ayla Jean Yackley; editing by James Jukwey)