* Loans helped Kurdistan settle $1 bln London litigation
* Kurdistan also repaid debts to producers a week earlier
* Independence referendum scheduled for Sept. 25
LONDON, Sept 1 (Reuters) - Iraq's Kurdistan has borrowed funds from its oil buyers including Russia's Rosneft to help settle a $1 billion London court case, as it cleans up its finances ahead of an independence referendum.
Industry sources said the Kurdistan Regional Government (KRG) had restructured some of its existing crude export finance deals with oil buyers to raise funds to settle a long-running case with UAE-based Dana Gas and its partners.
The settlement, announced on Wednesday, is another sign that the semi-autonomous region is working on getting its finances in order ahead of a planned referendum this month seeking independence from the government in Baghdad.
Kurdistan also signed deals last week with key oil producers on its territory to clear outstanding debts.
"With debts to oil producers cleared and the litigation settled, the KRG is gearing up for the referendum on a positive note. It is obvious that it doesn't want to carry forward any deadweight," said an industry source who helped structure the latest deals.
Majid Jafar, managing director of the board at Dana Gas, said: "The KRG has a publicly stated goal of clearing debts with investors. By doing that they become more attractive for investors, they can develop their reserves faster and ultimately raise more capital."
Kurdistan agreed to pay $1 billion to settle a $2.34 billion lawsuit brought by Dana and its partners in the Pearl consortium over unpaid oil liquids production. The case had run for several years until this week's agreement.
To help raise the money, Kurdistan asked Rosneft and traders led by Trafigura to effectively restructure existing oil export pre-finance deals and defer some payments, sources said.
Rosneft declined to comment.
Trafigura confirmed that it had participated in the fund raising. "We provide ongoing support to the KRG," it said.
Trading houses have been bankrolling Kurdistan for the past three years and have been joined this year by Rosneft, which is seeking to expand abroad and often acts as the Russian government's foreign policy tool.
Prior to the latest round of lending, trading houses as well as Rosneft have loaned the KRG around $3 billion guaranteed by future oil sales.
Out of the $1 billion that the KRG will repay to Dana and its Pearl consortium partners, $400 million will go back to Iraq's semi-autonomous region where the consortium agreed to increase investments to expand gas production. (Reporting by Dmitry Zhdannikov; Editing by Susan Fenton)