Iran and Iraq signed a memorandum of understanding to study construction of an export pipeline to transport crude from Kirkuk through Iran, according to a statement by the Iraqi Oil Ministry.

Baghdad and Tehran also called for a commission to solve a dispute over joint oilfields and discussed the possibility of transporting Iraqi crude to Abadan refinery in western Iran.

The pipeline to transport crude form the northern Iraqi fields of Kirkuk through Iran would offer an alternative route for the Iraqi federal government, reducing its dependence on the Kurdistan Regional Government.

Flow of crude from Kirkuk has suffered several disruptions last year as a result of disagreements between the Kurdish and Iraqi federal governments over the former’s share of national budget and oil revenues.

Iran, since the lift of nuclear-related sanctions over the country last year has prioritised the development of oil fields such as Azadegan, Majnoon, Yadavaran, Yaran and Azar which lie along its border with Iraq.

The National Iranian Oil Company pre-qualified international companies to participate in the tender of these fields under the newly developed Iran Petroleum Contract, which is expected to take place in the first quarter of 2017.