BAGHDAD, July 3: Iraq’s cabinet on Tuesday approved an amended draft oil law - a key plank to help unite the country’s warring communities -- and forwarded the bill to the parliament.

“The oil and gas law has been endorsed at a cabinet meeting unanimously and was sent on Tuesday to the house of deputies,” Prime Minister Nuri al-Maliki said at a press conference.

“It will be taken for its first reading in the parliament on Wednesday.”

Government spokesman Ali al-Dabbagh said the draft had been amended by a government consultative committee which made “some linguistic amendments to the law”.

The changes addressed the mechanisms to be used to share revenues among the oil-rich country's nearly 28 million people, he said.

The law, a key benchmark stressed by Washington to end the sectarian bloodshed in Iraq, aims to distribute revenues from crude oil exports equitably across 18 provinces and open the sector to foreign investors.

Ownership of Iraq’s vast oil reserves has been a subject of fierce debate among leaders from the country’s bitterly divided factions.

Oil exports are Iraq’s single most important source of revenue, even after more than four years of frequent insurgent attacks on oil facilities.

Its proven oil reserves, estimated at 115 billion barrels, are thought to be the third largest in the world, but since the US-led invasion production has tumbled from 3.5 million barrels per day to around two million.

The bill was first approved in February but the powerful factions expressed reservations about the text, prompting further debate.

Oil ministry spokesman Assim Jihad said the factions had “varied views on the role of the state-run oil company, the ministry, and on discovered and undiscovered oilfields.””Each of these items will now be discussed inside the parliament.”

On the controversial question of foreign ownership, Dabbagh said the oil law will address the issue of production sharing on a “case-by-case basis.”

”We usually seek best revenues for Iraqis when signing a contract,” he said.

A number of foreign companies have already entered into contracts with the Kurdish Regional Government in northern Iraq and fear that the new law may terminate those contracts.

In May, Iraq’s Oil Minister Hussein Shahristani said that any contract signed before the adoption of law would be cancelled.

Kurdish officials nevertheless say they will honour the contracts, and the regional administration claims to have reached an agreement with Baghdad whereby it will receive 17 per cent of the country's oil revenues.

Most oil production is in the Shiite south, but the best prospects for exploration are around the ethnically-mixed northern city of Kirkuk, which Kurds would like to incorporate into their largely autonomous region.

A referendum to settle the city’s fate is supposed to take place this year, but the city's sizeable Arab and Turkmen minorities are bitterly opposed to it, and have been pushing to delay the vote.

US officials have repeatedly urged the Iraqis to adopt a consensus law on sharing revenues and on international investment in order to head off future conflict and allow the oil sector to develop.—AFP