By Simon Webb
DUBAI, Sept 5 (Reuters) - Sabotage attacks on an Iraqi pipeline linking the country's northern oilfields with Turkey have abated but its dilapidated oil network is still unable to meet production and export targets.
Iraq restarted the pipeline in August and has since shipped about 5 million barrels from its Kirkuk fields to the Turkish Mediterranean port of Ceyhan.
Renewed exports and hope that Iraq's parliament may soon pass an oil and gas law have led to upbeat comments from Iraqi officials keen to rebuild the sector, which is crucial to generating desperately needed revenue.
"I think superficially it is looking a lot more positive in Iraq now than it has done," said Julian Lee, senior energy analyst at London's Centre for Global Energy Studies.
"But I am not yet convinced that we have reached the point that this translates into a genuine improvement on the ground."
The northern pipeline, Iraq's secondary export route, has been mostly paralysed due to attacks since the U.S.-led invasion in March 2003.
Most of Iraq's oil, around 1.5 million barrels per day, is shipped through its southern Basra oil terminal.
"Pipelines are still undergoing attacks, but the level of attacks has come down recently in a very significant way," said Issa Jaffar Jabir, Director General at Iraq's Ministry of National Security Affairs.
Iraq's air force would soon join efforts to protect the country's oil infrastructure, he added.
Oil Minister Hussain al-Shahristani said in August that Iraq had built a new section of the northern pipeline and deployed a special security force to protect it.
"Attacks in the past year seem to have shifted away from the pipelines," said Lee.
"It's not entirely clear whether that has been forced on attackers due to better pipeline protection, but if it has then there's a chance that these exports may be more sustainable."
The flow through the pipeline stopped late on Sunday. The Oil Ministry said the halt was for technical reasons and not due to an attack. Iraq was in the process of selling the 5 million barrels from Ceyhan, the largest such sale for over a year, and hoped to export more soon.
OIL LAW
U.S. General David Petraeus was due to give a report to Washington next week on progress in Iraq. He was expected to say that the build-up of 30,000 more U.S. troops since February and his counter-insurgency strategy had reduced violence between Shi'ite and Sunni Arabs. (For ANALYSIS, see [ID:nCOL246708])
In Iraq, parliament was expected to begin debating the oil law soon.
Washington has pushed for progress on this law, seen as key to reconciling warring Iraqis and attracting foreign investment.
Despite lengthy negotiations, there are major disagreements over control of the world's third largest oil reserves.
The draft law aims to ease tensions by ensuring that Sunni Arabs share oil profits, although most of the reserves are in the Kurdish north and the Shi'ite Muslim south of the country.
"There is as yet no Iraqi agreement (with regard to the oil law) as to what constitutes the best interests of the country," Timothy Mills, President of the American Chamber of Commerce of Iraq, told a conference in Dubai on Tuesday. "It's still a mess." Control of Kirkuk's oil riches is itself a potential flashpoint. A referendum was due this year as to whether Kirkuk city and the surrounding area should come under control of Iraq's Kurdish regional government. Analysts fear the referendum could drag the city into Iraq's sectarian bloodshed.
Iraq's oil production is stuck at around 2 million barrels per day (bpd). Output has yet to recover to the nearly 3 million bpd of the final days of Saddam Hussein's regime and is just over half of the 3.7 million bpd pumped in 1979 before the Iran-Iraq war.