BAGHDAD Iraq and Syria plan to build a a new oil pipeline to replace an old, corroding one, Iraq Oil Minister Amir Muhammed Rasheed told the government newspaper **** Al-Jumhouriya ****.

"We are planning with our brothers, the Syrians, to set up a new oil pipeline because the old one is no more economical," Rasheed was quoted as saying in a report on Saturday.

Industry officials said they assumed the pipeline would replace the one running from the Kirkuk oil field in northern Iraq to the port of Banyas on Syria's Mediterranean coast that was closed in 1982.

Rasheed said the planned capacity of the new pipeline was around 1.4 million barrels per day (bpd).

The minister said construction of the new pipeline would be built in two stages -- the first from the Iraqi border inside Syrian territory while the second stage would be inside Iraqi territory. There was no indication about when it would be built.

He said a tender would be announced to construct the part inside Syria while the part inside Iraq would be implemented later "after Iraq's financial situation was improved."

Iraq is subject to stringent UN sanctions which bar it from freely exporting its oil and investment in the oil sector. But the UN has allowed Iraq since December 1996 to sell oil to buy food, medicine and other humanitarian needs for the Iraqi people.

Oil industry sources said in November that Iraq was pumping nearly 150,000 bpd to Syria through the old pipeline in violation of UN sanctions.

In Washington, the United States said on Tuesday it was still checking reports that Baghdad was pumping oil to Syria.

Rasheed said another oil pipeline would be set up with Jordan. The pipeline would be also be built in two stages. The first would be from the Iraqi border to the Jordanian al-Zarka refinery and the second will be from Haditha 260km (156 miles) northwest of Baghdad to the Syrian border, he said.

He said the first stage would be implemented by the Jordanian government which had already announced a tender to set up the pipeline. The stage inside Iraq would be postponed until Iraq's financial situation improved, he added.

Iraq is currently exporting some 80,000 bpd overland to Jordan using tanker trucks. The oil is exempt from UN trade sanctions.

(Reuter)