"Production in the oil fields of Kurdistan will resume soon," Hussein al-Shahristani said.

The three provinces in the autonomous region, which only started exporting oil last June, through a pipeline to neighbouring Turkey, halted production and sales abroad in mid-October.

Baghdad has refused to recognise contracts the Kurdish government signed with foreign oil companies and has refused to pay them, but the central government will announce in the coming days "a new mechanism for managing oil production in the Kurdistan region," Shahristani said.

Sharistani said the Kurdish oil would be "transported through Iraqi pipelines and all the revenue collected by the central government."

Baghdad wants to return 17 percent of those revenues to the Kurds, who are holding out for 100 percent.

The Kurdish fields are being exploited by DNO of Denmark and Genel of Turkey. Before the halt in production, they were exporting 60,000 barrels a day.