By Suadad al-Salhy

BAGHDAD (Reuters) - Iraq's central government and the country's autonomous Kurdistan agreed to end an oil payment dispute after Kurdistan pledged to continue exports and Baghdad said it would pay foreign companies working there, a senior Iraqi official said on Thursday.

The decision resolves part of a broader feud between Baghdad and Kurdistan about control over oil and territory that has involved major companies including Exxon Mobil , Chevron and Total .

Deputy Prime Minister Rosh Nuri al-Shawish, a Kurd who is part of the central government negotiating team, said Kurdistan would keep pumping its share of national oil exports, and Baghdad would pay foreign companies in the Kurdish region.

"The two delegations agreed to resolve all disagreements and pay the foreign oil companies working in Kurdistan based on the budget law," Shawish's office said in a statement.

"The two sides agreed to continuing oil exports from the region through the Iraqi oil pipeline and to work to increase production to 200,000 barrels per day as a first stage."

Current shipments from the Kurdistan region as part of national oil exports are around 120,000 bpd, though Baghdad says the agreed amount should be 175,000 bpd. The statement gave no details on when the increase to 200,000 bpd would occur.

Kurdistan in April halted shipments of its oil in protest over what it said were payments due from the central government to companies in the Kurdish region. It restarted shipments later, but said it would cut them off again by September 15 if there was no agreement on payment.

Baghdad and Kurdistan are still caught in a dispute over major oil companies like Exxon Mobil and Chevron who have agreed to sign exploration deals with the Kurdistan Regional Government, contracts the central government says are illegal.

Kurdistan, autonomous with its own regional authority and armed forces since 1991, gets central government funding and uses national pipelines to ship its oil. Baghdad says only the central government has the right to ship oil and gas produced in the country.

The Kurdish region has been looking for more energy autonomy. Already Kurdistan is shipping liquid fuel bi-products to Turkey in exchange for diesel and kerosene for the region's power plants.

A draft national oil law that aims to resolve the disputes over crude has been caught in political infighting for years, though both Baghdad and Kurdistan say that there is progress on reaching an agreement on that legislation.

(Reporting by Suadad al-Salhy; Writing by Patrick Markey; Editing by Andrew Heavens)




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