UPDATE 1-Iraqi Kurdistan starts oil pumping from Kirkuk -Iraqi official

(Adds details, background)

By Rania El Gamal

DUBAI, July 17 (Reuters) - Iraq's autonomous Kurdish regionhas begun to pump oil from Kirkuk fields previously controlledby Iraq's central government into the pipeline system that runsin its own territory, a senior Iraqi oil official said onThursday.

Kirkuk lies on the disputed boundary between the northern Kurdish region and the rest of Iraq and is at the heart of along-running dispute between Baghdad and Arbil, the Kurdishregional capital, over territory and natural resources.

Kurdish forces took control of production facilities at theKirkuk and Bai Hassan northern fields on July 11, exploiting apower vacuum created by an Iraqi military withdrawal in the faceof an Islamist insurgent offensive.

The Iraqi official told Reuters by telephone from Baghdadthe Kurdish region had started to pump crude from one of theKirkuk domes to the Khurmala dome, out of which the Kurdishpipeline runs, using an existing connection.

"They are using a pipeline which was originally used to sendcrude from (Kurdistan), but they have now reversed it (to use itby the Kurdish region)," the official said, estimating thequantity at around 20,000-25,000 barrels of oil per day.

The Kurdish Ministry of Natural Resources could notimmediately be reached for comment.

Kirkuk's Baba and Avana geological formations werepreviously administered by Baghdad before the July 11 takeover.The Kirkuk region's third formation, Khurmala, has long beenunder the control of the Kurdistan Regional Government (KRG).

Kurdish forces took control of Kirkuk a month ago, makinggood on a longtime territorial claim to the city, after Iraqitroops left in the face of a lightning assault by Islamic Stateinsurgents, who have seized large parts of northern and westernIraq, but not threatened well-defended Iraqi Kurdistan.

The Kirkuk and Bai Hassan oilfields have a combinedproduction capacity of 450,000 bpd but have not been producingsignificant volumes since March, when Iraq's Kirkuk-Ceyhanexport pipeline was sabotaged by Islamist militants.

Last year, Baghdad signed a deal for BP BP.L to revive theKirkuk oilfield, a plan that the KRG has rejected as illegal. (Additional reporting by Isabel Coles in Arbil; editing by MarkHeinrich)