UPDATE 1-Iraq, BP sign Kirkuk oilfield development contract, oil official says

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BASRA, Iraq, May 7 (Reuters) - Iraq's state-run North Oil Company signed an agreement with BP on Monday to boost output from the Kirkuk fields in the north of the country, an Iraqi oil official said.

The agreement was signed in the southern Iraqi city of Basra, he told Reuters.

Iraq in January signed a memorandum of understanding with BP to boost Kirkuk's output capacity to 750,000 barrels per day (bpd), more than twice existing capacity.

The oilfields were taken back under Baghdad's control last October after Iraqi government forces dislodged Kurdish fighters from the area.

Oil Minister Jabar al-Luaibi began the talks with BP in October, only days after the Kurdish fighters were driven from the area.

Oil exports from the field, transported by pipeline to Turkey, halted after the Iraqi military operation, which was conducted in retaliation against an independence referendum held on Sept. 25 by the semi-autonomous Kurdistan Regional Government (KRG).

Iraq plans to start trucking crude from Kirkuk to Iran, but the road to the border has yet to be secured from attacks by Islamic State insurgents.

BP had agreed in 2013 to help Baghdad halt a sharp decline in output from Kirkuk. The KRG took control of the Kirkuk region in 2014, when the Iraqi army collapsed in the face of Islamic State's sweeping advance in northern and western Iraq.

The Kurdish move prevented the fields from falling into the hands of the militants.

Kirkuk is one of the biggest and oldest oilfields in the Middle East, estimated to contain about 9 billion barrels of recoverable oil, according to BP.

BP has provided technical assistance in the past to North Oil to help redevelop the Kirkuk field.

Iraq is the Organisation of Petroleum Exporting Countries' second-largest producer behind Saudi Arabia. Iraq's oil output capacity is nearing 5 million bpd, but it is currently producing 4.4 million bpd in compliance with an agreement between oil exporters to support crude prices. (Reporting by Aref Mohammed; Writing by Maher Chmaytelli; Editing by Mark Potter and Adrian Croft)