Iraq’s cabinet has agreed a draft law which would regulate how the country’s oil wealth would be shared between its ethnic and sectarian communities.

The law, which will now be sent to the parliament for approval, will also set out terms regulating how foreign oil firms will be able to operate in Iraq.

Barham Salih, Iraq’s deputy prime minister and head of the committee that drafted the law, told Reuters news agency on Sunday: “The council of ministers in an extraordinary meeting today approved the draft of the national hydrocarbon law.

“The law is hoped to enable Iraq to achieve its potential and utilise its revenues for the benefit of all Iraqi people.”

Kurdish concerns

The government of Nuri al-Maliki, the Iraqi prime minister, had pledged to reach an agreement on an oil law by the end of 2006 but missed its self-imposed deadline due to Kurdish concerns about relations between the regions and Baghdad.

After the agreement al-Maliki said: “The benefits of this wealth will form a firm pillar for the unity of Iraqis and consolidate their social structure.”

The Kurdish government had reservations about the wording regarding the powers of a federal council, to be established under the law, which would set oil policy and lay down ground rules for contracts signed with foreign firms.

Officials from Kurdistan, where relative security has encouraged more development than elsewhere in Iraq, had said they wanted assurances that the federal council will not invalidate their existing contracts.

The draft law would allow the Kurdish regional government to review the contracts it has signed to ensure consistency with the terms of the new law, Salih said.

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