Prime Minister Nuri al-Maliki symbolically opened the valve of a pipeline that runs from Iraq's southern oil fields to the port of Faw, 535 kilometres (332 miles) south of Baghdad, and then on to the terminal.

Iraq launched a programme in 2007 to increase its oil export output. It envisages the construction of five floating offshore terminals in the Gulf.

The other four floating terminals are due to be operational by the end of 2013. So far the project has cost $1.5 billion.

Iraq seeks to export five million barrels of oil per day in 2014, according to Iraq Oil Forum expert Ruba Husari.

It currently produces 2.9 million bpd and exports between 1.6 and 1.7 million.

Oil sales account for the vast majority of Iraqi government income and around two thirds of gross domestic product. The country exported an average of 2.1 million bpd in 2011, according to Oil Minister Abdelkarim al-Luaybi.

Iraq plans on increasing production and exports this year to 3.4 million bpd and 2.6 million bpd respectively, Luaybi, who was present at Sunday's ceremony, said recently.

Currently about a quarter of Iraqi oil exports come from northern fields and are routed by pipeline to the Turkish Mediterranean port of Ceyhan.