Thu, 23 Apr 2009 13:54:45 GMT

Tehran and Baghdad have agreed to build an oil pipeline connecting the main Iraqi oil hub of Basra to the oil-rich Iranian city of Abadan.

The agreement was reached between visiting Iraqi Oil Minister Hussein al-Shahristani and his Iranian counterpart Gholam-Hossein Nozari in Tehran, said Iran's Deputy Oil Minister Noureddin Shahnazizadeh.

Shahnazizadeh says Iran plans to import up to 200,000 barrels of oil per day from Iraq to feed the Abadan Refinery in the southwestern province of Khuzestan.

The official added that the two countries had signed an agreement that would allow Iranian companies to participate in the construction of five refineries in Iraqi cities.

IRNA quoted al-Shahristani on Thursday as saying that the two sides had agreed to jointly develop their oil and gas fields.

Iran had earlier agreed to supply Iraq with 1.5 million tons of fuel oil and 1.5 million tons of diesel fuel per day.

While Iran is the second-biggest oil producer in the Organization of Petroleum Exporting Countries (OPEC), it spends billions of dollars on gasoline imports.

Iraq is the holder of the world's third-largest oil reserves. However, six years of conflict following the US invasion has battered the country's oil industry, negatively affecting its production ability.