Work on a pipeline carrying oil from northern Iraq to Turkey should be complete "in a day or two", an industry source based in the Kurdistan region said on Sunday, with the outage now in its third week.

Flows through the pipeline, which carries around 600,000 barrels per day (bpd) of oil from fields in Iraq's Kurdistan region and Kirkuk to the Mediterranean port of Ceyhan, have been suspended since Feb. 17.

The Turkish energy ministry said on Feb. 27 it had begun work to repair the pipeline.

"They are working and should finish up in a day or two," said the source, who asked not be identified.

The pipeline runs through Turkey's restive southeast, which is engulfed in the worst violence since the 1990s after a two year-long ceasefire between the state and Kurdish militants broke down last July.

Turkey's energy ministry said flows were initially suspended due to temporary security measures, and that militants from the Kurdistan Workers' Party (PKK) had subsequently blown up the pipeline.

A spokesman for the PKK, which has waged a three-decade insurgency in the southeast, denied the group was responsible for the current outage and said the accusations were part of a smear campaign by Turkish intelligence services.

"Neither the guerrillas, nor the supporters of the PKK have done such a thing," Zagros Hiwa told Reuters on Sunday from the group's Qandil mountain stronghold in northern Iraq.

Hiwa said Turkish intelligence services sought to create tension between the PKK and the government of Iraq's Kurdistan region (KRG), which depends on revenues from its exports via the pipeline to survive.

The PKK, considered a terrorist group by Turkey, the United States and the European Union, has in the past claimed responsibility for attacking the pipeline, condemning economic ties between the KRG and Ankara.

The outage, one of the longest in the past two years has deepened an economic crisis in the Kurdistan region, which has been hit hard by the global slump in oil prices and is unable to cover its own payroll.

A KRG source told Reuters last Wednesday the outage had already cost the region $200 million.- Reuters