Iran seeks diplomatic fix for Iraq border dispute

Tehran wants to solve by diplomatic means a dispute with Baghdad over accusations that Iranian troops seized an oil well inside Iraq, a spokesman at the Iranian embassy said today.

The Iraqi government also called for a peaceful solution without any military escalation and said the dispute, which pushed up world oil prices yesterday, would not affect the nation's crude output or exports.

Iran's ambassador to Baghdad Hassan Kazemi-Qomi met Iraqi government officials to discuss Baghdad's charges of an incursion by 11 Iranian soldiers who had taken over the well in a disputed border area, the spokesman said.

However, the ambassador reiterated Iran's denial of the Iraqi charges at the meeting yesterday.

The ambassador had told the Iraqi side that a joint committee including oil and military officials from both countries was responsible for settling such problems.

"We will resolve this issue in a diplomatic fashion," the spokesman said on condition of anonymity, echoing similar calls from the Iraqi government a day earlier.

Oil prices rose on the report about the commandeered well at Fakka oilfield in Maysan province. Border disputes between the two countries continue to rankle more than two decades after they ended an eight-year war in which an estimated 1 million people died.

An official in Maysan, who asked to go unnamed, said the Iranian troops were still present at Fakka today, and that the local government would send a delegation out to the remote desert area tomorrow.

Iraqi government spokesman Ali al-Dabbagh, speaking to Reuters Television in Baghdad, reiterated the government's desire for a peaceful, and immediate, withdrawal from the area around Fakka's well No. 4.

"We call for calm and for a peaceful solution to this matter, far from any military escalation."

Dabbagh said the affair would not affect crude output or exports from Iraq, which has the world's third largest oil reserves and exported an average of 1.9 million barrels per day last month.

Fakka is a modest oilfield by Iraqi standards, currently producing around 10,000 barrels per day.

But development of the field is part of Iraq's plan to more than quadruple the nation's production capacity to 12 million barrels per day in six or seven years, turning it into a leading world energy producer.

The Oil Ministry offered a contract to develop Fakka and nearby fields in an auction in June, its first since Saddam Hussein was overthrown, but foreign firms declined Baghdad's terms.

Iraqi officials held an emergency security meeting on Friday evening, accusing Iran of a "violation of Iraqi sovereignty" and demanding immediate withdrawal.

At the same time, the Iraqi government sought to avoid lasting damage to its complex, delicate relationship with Iran, a fellow Shi'ite Muslim majority nation and regional power that has long opposed the US military presence in Iraq.

Iraqi oil officials said Iranian soldiers had temporarily occupied the oil well in a remote desert area several times over the past year, calling it a deliberate provocation.