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Disagreements over pricing and payment main sticking point

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First time U.S. diplomat officially attends talks

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Trump administration piling pressure on Iraq

(Changes headline, recasts after meeting ends with no

agreement)

By Ahmed Rasheed and Maha El Dahan

BAGHDAD/DUBAI, March 6 (Reuters) - Talks on resuming

Iraqi oil flows to Turkey that have been halted for two years

failed on Thursday for the second time in a week, two official

sources with knowledge of the matter told Reuters.

The two-year stand-off has halted flows from Iraqi Kurdistan

in the north of the country to Turkey's Mediterranean port of

Ceyhan.

An official from the U.S. Embassy in Baghdad attended the

talks for the first time, which were held at the Iraqi oil

ministry's headquarters in the city, four sources told Reuters.

Washington is applying pressure to Iraq to resume the

exports, with Reuters reporting last month that U.S. President

Donald Trump's administration had asked Iraq to allow the flows

to restart or face sanctions.

The U.S. administration's stance in part reflects its

"maximum pressure" campaign on neighbouring Iran which includes

efforts to squeeze off Tehran's oil exports.

The main sticking point at Thursday's meeting was over

pricing, one of the two official sources said.

Talks on Sunday had also ended without a breakthrough.

On Thursday the ministry insisted on a production cost of

$16 per barrel for exported volumes of around 185,000 barrels

per day (bpd), but would not apply that price to all production

from Iraqi Kurdistan, one of the sources said, adding that the

foreign oil firms involved strongly rejected this.

Oil producers working in Kurdistan include DNO,

Genel Energy ( GEGYF ), Gulf Keystone Petroleum ( GUKYF ) and

Shamaran Petroleum ( SHASF ).

Another source with knowledge of the matter told Reuters

that Baghdad had earlier promised that the price would apply to

all production but had backtracked at the Sunday meeting with

oil firms.

U.S. OFFICIAL

The U.S. official attended Thursday's talks at the request

of Washington, an Iraqi oil ministry official with direct

knowledge of the matter told Reuters.

"The presence of the U.S. diplomat aims to help push the

negotiations forward and reach solutions to the issues hindering

the resumption of oil exports in a way that satisfies all

parties," the official said.

"There is strong insistence from the U.S. side on ensuring

the success of the negotiations by any means," said a government

official close to the talks.

The White House National Security Office did not respond to

a request for comment.

Washington wants the flows via Turkey restarted partly to

boost global supply and therefore help lower prices. At the same

time the U.S. administration wants to halt financial ties

between Iraq and neighbouring Iran as it applies pressure on

Tehran over its oil exports and nuclear program.

Iraq is an important ally to the United States and Iran and

vital to helping the latter support its economy amid

international sanctions.

Baghdad is wary of getting caught in the crosshairs of the

U.S. president's policy of squeezing Tehran, sources have told

Reuters.