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Tue 22 May 2007 01:56 AM

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Iraq holds oil law talks

Officials hold talks to overcome disagreements between government and Kurds.

Iraqi officials are holding talks in Baghdad over a draft oil law, to overcome last-minute disagreements between the central government and the Kurdish region, officials said on Monday.

Iraq sits on the world's third-largest oil reserves and officials have been struggling since last year to finalise the draft law, which is vital for Iraq to attract investment from foreign firms to boost its oil output and rebuild its economy.

The cabinet approved the draft in February but it still needs to be passed by parliament.

The legislation is crucial to regulating how wealth from Iraq's oil reserves would be shared by its sectarian and ethnic groups.

Last month, Kurds from Iraq's oil-rich north threatened to block the law in parliament and clashed with the central government over some of its annexes, raising the prospect of more delays that dogged the lengthy drafting of the legislation.

Iraqi officials told Reuters that talks to iron out the disputes between Kurdish, Sunni Arab and Shi'ite officials began in the capital on Sunday after preliminary discussions in Kurdistan.

"We have started the talks. We hope we will overcome the problems," one official at the meeting said.

It was not clear how long the meetings will continue but Iraqi officials have said they hoped parliament will pass the draft by end of May.

The threat to fight the bill in Iraq's national parliament came days after the Oil Ministry in Baghdad warned regions against signing contracts until the landmark law was passed.

The Kurds have objections over some annexes in the draft which would wrest oilfields from regional governments and place them under a new state oil company.

Iraq's Kurdistan regional government has signed several agreements with foreign companies, including a service contract last month with United Arab Emirate's Dana Gas.

A coalition of Kurdish political parties in Iraq's national parliament holds 53 seats in the 275-member legislature.

"Everybody is aware that we need to pass this law, it is for our interest," a senior oil industry official told Reuters.

"They all agree on the law itself but there are some details which need to be reviewed. I hope it will not take long this time," the offical said.

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