Direct exports of crude oil from Kurdistan to Turkey may reach 20,000 barrels per day (bpd) in a few weeks, the chief executive of Genel Energy said, in a sign that a trade that officials in Baghdad see as illegal is set to grow.

The export of crude by truck to Turkey demonstrates the Kurdistan Regional Government's (KRG) growing frustration with Baghdad as it moves towards greater economic independence.

"The KRG has given us approval to begin trucking relatively small volumes of crude," Genel CEO Tony Hayward told reporters on Wednesday, adding that exports of the oil would probably rise to 10,000-20,000 bpd in the next few weeks.

Hayward, former head of UK oil major BP, said the Anglo-Turkish company he now leads was getting paid by the KRG for the oil it trucks from the Taq Taq oilfield to Turkey, which pays the KRG.

"It's government to government. The KRG gets paid, and we receive from them," he said.

The KRG halted exports through the Baghdad-controlled Iraq-Turkey pipeline last month in a dispute over payments to oil companies operating in Kurdistan, and officials in Baghdad say the trade of Kurdish oil would make it even more difficult to reach a deal on payments.

A new 75 km pipeline linking the Taq Taq oilfield to the existing Kirkuk-Ceyhan export infrastructure should be up and running soon, Hayward said. "It'll be mechanically completed by the end of the month and fully operational in mid-February."

If Baghdad and the KRG reach an agreement, the new link would make exports through the federal pipeline system easier.

For over a year, Kurdistan has upset Baghdad by signing deals with oil majors such as Exxon Mobil and Chevron, providing lucrative production-sharing contracts and better operating conditions than in Iraq's south.

The KRG says its right to grant contracts to foreign oil firms is enshrined in the Iraqi constitution, drawn up following the 2003 invasion that ousted Sunni dictator Saddam Hussein.

Baghdad said last month it would not pay oil firms operating in Kurdistan because the region had failed to export the volume of crude it pledged under a deal struck in September.

That agreement stipulated that Kurdistan would pump crude through the Baghdad-controlled Iraq-Turkey pipeline in return for payment. An export target of 200,000 bpd was set for the last two months of 2012, and Kurdish authorities pledged to raise exports to 250,000 bpd in 2013. – Reuters