TEHRAN -- Iran will in September increase its handling of oil exports from Kazakhstan as part of a scheme in which the Central Asian state pipes oil into northern Iran and is credited for exports through the Persian Gulf, the Oil Ministry told AFP Sunday.

A spokesman for the ministry said the quantity of the oil handled by Iran's Tehran Refinery would increase to 120,000 barrels per day in September, generating 240,000 dollars a day in revenue for the Islamic Republic.

Kazakhstan pays two dollars per barrel under the deal. Iran already handles 50,000 bpd of Kazakh oil, which is piped into Iran via the Caspian Sea.

The ministry said the cost of increasing the handling of Kazakh oil would be 171 million dollars, mostly to upgrade pipelines and infrastructure.

The two countries eventually plan to raise the quantity of oil to 370,000 and possibly half a million bpd.

Iran, a founding member of Organization of Petroleum Exporting Countries (OPEC), currently exports 3.6 million bpd of its own oil.