(Fixes typo in headline)
* Repair work begins after nearly three months on northern pipeline
* Work will take 10-15 days
* Officials speak of collusion between militants, smugglers and corrupt army officers
By Ahmed Rasheed and Ziad al-Sinjary
BAGHDAD/MOSUL, Iraq, May 23 (Reuters) - Iraqi engineers are at last fixing the main pipeline to Turkey after it was shut down for nearly three months in attacks by an al Qaeda-offshoot cell, causing a total collapse in exports from northern oil fields worth billions of dollars.
Iraqi officials say repair crews finally reached the pipe this week, a month after forces killed the leader of the cell of the Islamic State of Iraq and the Levant (ISIL) blamed for repeatedly blowing it up and attacking engineers sent to fix it.
Reopening the pipeline - and keeping it open - are among the biggest challenges facing Iraq's Shi'ite-led government, five months into a new war with Sunni insurgents who have seized control of cities in the west and countryside in the north.
Government officials blame oil smugglers and corrupt local security officers for helping ISIL fighters close the pipeline, costing the government at least $3 billion so far this year.
But they say that the arrival of new, mainly Shi'ite commandos in the north has improved the situation, allowing repair crews to safely reach the pipeline at last.
"Security is better now . and we managed to reach some damaged sections of the pipeline on May 19," said an oil official in Mosul. Multiple teams were being sent out to repair 30 breaches along the pipeline.
"If all goes as planned, we will finish repairs in 10-15 days from May 20," the official said.
The pipeline to the Turkish port of Ceyhan is the only route to market for most of the oil produced in Iraq's northern fields. It has been repeatedly attacked throughout years of conflict, but the stoppage since March is the longest time it has been off-line since the days of sanctions in the 1990s.
The pipeline route has already been bombed 50 times this year, nearly equal to the 54 attacks in all of 2013.
Prime Minister Nouri al-Maliki dismissed a 300-man local security unit in March and sent an 800-strong unit from the mainly-Shi'ite south to replace them.
On April 17 the newly-arrived commandos killed the local ISIL "emir" or prince, Khalid al-Juri, in a three-hour gun battle when they surrounded his hideout in Nineveh province northwest of Mosul, based on a tip from an informant. Twelve soldiers and eight insurgents died in the shootout.
"Eliminating ISIL local leader Prince Khalid has contributed remarkably to further weakening terrorist groups in Ain al-Jahash," said a military intelligence general at the Nineveh military command, referring to insurgent-infested badlands known in English as Donkey Springs, where the pipe crosses the desert.
Blowing up the pipeline is not only costly for Baghdad, it is lucrative to the attackers, who are able to siphon oil into trucks and smuggle it for sale abroad. Prince Khalid's involvement in the trade earned him the nickname "oil minister".
The trade has not stopped since he was killed: the commandos say they seized least 12 trucks carrying smuggled crude in the Donkey Springs area on May 14.
"Four of the drivers confessed they are members of ISIL and they sell the crude to other buyers who transfer the cargos outside Mosul," said Army Major Ahmed Jarallah of the commando unit. "Revenues from stolen crude were used to keep the blood of our security forces and innocent people flowing."
Officers now claim it is nearly impossible for smugglers to get one truck of illicit fuel through a ring of commandos in the area, sometimes referred to as Iraq's answer to Afghanistan's Tora Bora, a onetime den of al Qaeda militants.
But security is far from stable in Nineveh and the surrounding provinces. Police and army officers are regularly ambushed on roads at fake checkpoints, and even in their homes and on bases.
Whether the death of Prince Khalid proves the decisive blow to militants and smugglers will soon be determined. Iraq expert Zaid al-Ali, author of "The Struggle for Iraq's Future: How Corruption, Incompetence and Sectarianism Have Undermined Democracy" was sceptical.
"Blaming everything on a single emir is also something we have been hearing for a long time. Then the person dies, they say the problem will go away and of course it doesn't," he said.
He said networks of smugglers and militants were never truly defeated in Iraq, even when violence dropped between 2008 and the withdrawal of U.S. troops in 2011; the groups just hibernated and are once more helping fuel the rising turmoil.
"Suddenly (the smugglers) saw those they could intimidate or found corrupt elements in the security forces they could work with," Ali said, describing the criminal networks as pervasive. "From Mosul to Tikrit you see these armed gangs."
A senior security official in Mosul said smugglers were paying $10,000 to ISIL for every truck of oil it ships out. Crooked army officers provide military guard.
"It's a huge industry," the security official said. "Militants bomb the pipeline. Smugglers siphon crude to trucks and army officers escort. Eventually all parties are profiting from this process."
Mosul governor Atheel al-Nujaifi confirmed in mid-May that smuggling operations were continuing with the involvement of army officers and that the issue had been raised in Baghdad.
"Yes it's happening there and some army units are implicated," Nujaifi said, adding an official complaint had been sent to the government about specific army units. (Reporting by Ahmed Rasheed and Ziad al-Sinjary; Additional reporting by Ned Parker; Editing by Ned Parker and Peter Graff)
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