According to an exclusive Reuters report, the state of Turkey and the semi-autonomous regional government of Iraqi Kurdistan inked a energy package valued in billions of dollars this week. The agreement, said the news agency, would push Iraqi Kurdistan's campaign to be an oil and gas powerhouse. However, the report noted that the agreement would make the central government in Baghdad furious.

Sources who were close to the deal disclosed on Friday revealed the move was the culmination of a months-long, secret negotiation. Baghdad had said that any independent Kurdish oil exports were deemed illegal as it alone has the authority to manage Iraqi oil. For Turkey, on the other hand, the deal would signal the state's ability to have access to Iraqi Kurdistan's rich hydrocarbon resources, which in turn will help Turkey diversify its supplies in energy and further reduce its ballooning USD60 billion bill on energy.

The deal was signed in the early hours of Wednesday in Ankara during a three-hour meeting between Turkish Prime Minister Tayyip Erdogan and Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani.

One source said, "This is the most comprehensive energy deal in Turkey's history. But due to political sensitivities, both sides are taking their time to announce it."

Reuters was unable to secure comments from both the energy ministry and the office of the Turkish prime minister. Officials in Iraq deputy prime minister for energy, Hussain al-Shahristani's office were not available immediately for comment.

KRG's new pipeline is expected to be flowed with crude oil soon, of which the pipeline will be able to connect the 40-inch-wide existing Kirkuk-Ceyhan pipeline. Part of the deal that was signed would also have state-backed Turkish Energy Company (TEC) operate in 13 exploration blocks in northern Iraq. Half of the block, Reuters said, is partnering with U.S. oil giant ExxonMobil. The deal will also ensure building of new infrastructure to increase the region's oil exports.