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Last Updated: Thursday, 1 December 2005, 15:50 GMT
Kurd oil deal alarms Iraqi Sunnis
Kurdish fighter guards a DNO drilling site
Iraq's oil sector has long been in need of foreign investment
News that a foreign firm has begun drilling for oil in Iraq's Kurdish north has sparked new fears of secession among Sunni leaders.

Norwegian company DNO is the first foreign firm to drill for oil since the 2003 invasion and it began work this week at Zakho on the Turkish border.

It struck a deal with one of the Kurdish groups running the region.

Sunni spokesman Hussein al-Falluji said the Kurds were seeking to take Iraq's natural resources and break away.

Control of oil revenues is one of the most sensitive issues in Iraq especially in the run-up to elections in just two weeks' time, BBC analyst Roger Hardy reports.

What the new constitution says about the sharing of oil revenues and federalism remains fuzzy despite long negotiations and it will be up to the new parliament to clarify the situation, our analyst adds.

'Time to benefit'

It is unclear how far the central government in Baghdad was aware of the DNO deal with the Kurdish Democratic Party.

Critics say the Kurds were acting without government approval and behaving like a sovereign power but a Kurdish source told the BBC the move had all along had the blessing of the oil ministry in Baghdad.

At a ceremony to launch the drilling, Nachirvan Barzani, one of the Kurds' two regional prime ministers, stressed the benefits to his community.

"The time has come that instead of suffering the people of Kurdistan will benefit from the fortunes and resources of their country," he said.

"There is no way Kurdistan would accept that the central government will control our resources."

Mr Falluji, who was involved in constitutional negotiations for the Sunnis, said that if the Kurds did not reverse their position Sunnis would fight it "through diplomatic and political channels".

"We call on them to join the central government in Baghdad," he added.

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