Media reports are carrying the word of a source in Iraq’s South Oil Co. that the pipeline construction has started.

The South Oil Co. is a state-owned entity producing and transporting oil from Basra and surrounding areas, where 80 percent of Iraq’s oil reserves are located.

The Kuwait News Agency reports the construction of the pipeline between ports in Basra and the Abaadan port in Iran, crossing the Shatt al-Arab river.

The pipeline capacity would be 200,000 barrels per day, and provide another route for Iraq exports and allowing an increase in production, the Al Mashriq newspaper reports.

Iraq produces just over 2 million barrels per day right now, but with 115 billion barrels of proven reserves, it could handle much more.

Iraq and Iran had apparently signed a deal on the pipeline, though details are not known. Iraqi Oil Minister Hussain al-Shahristani has confirmed it as one of many options to increase production and exports of the oil.