European oil companies are purchasing an increasing volume of oil independently exported by Kurdistan, in defiance of Baghdad's threats to punish those that deal in exports it says are illegal.

Baghdad has promised to prosecute buyers of Kurdish condensate, a light grade of oil that has been exported without its permission since October.

Exports of regular crude started around the beginning of the year, and Baghdad has already announced plans to sue Genel Energy, the first firm to export the oil directly from the region on trucks via Turkey.

Demand by international oil firms has been strong enough to absorb an increasing amount of the independently exported oil, and traders said tenders have been drawing interest from a widening range of companies.

So far, buyers of Kurdish condensate have faced few repercussions, with one notable exception - trading house Trafigura, which was banned from Iraq in December.

This month, the region’s exports are expected to hit around 60,000 tons, equivalent to about 15,000 barrels per day.

The flow of oil, including condensate, from the Kurdish region could gradually rise to around 40,000 barrels per day (bpd), Turkey's energy minister has said, the equivalent of around 200 trucks a day.

Condensate exports already account for nearly the entire output of 17,000 bpd from Kurdistan’s Khor Mor field, and as capacity grows there are plans to begin exporting oil from other fields.

The flow has drawn a wide range of interest from Swiss-based trading firms such as Vitol and Trafigura, and new firms such as U.S. chemical company Dow have joined the rank of buyers, shipping sources said.

On Sunday, Iraq’s oil minister said Exxon Mobil, the first major oil company to sign an agreement with the KRG, had been given an ultimatum to choose between its oilfields in the south or Kurdish blocks in the north.