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Last Updated: Tuesday, 3 July 2007, 18:16 GMT 19:16 UK
Iraqi cabinet backs draft oil law
Pipeline pumping tubes in Basra
Most of Iraq's oil is in the Shia south and Kurdish north
Iraq's government has approved an amended draft law on how to share the country's oil wealth, Prime Minister Nouri Maliki has said.

Mr Maliki said the bill, which will now be passed to parliament to be debated, was the "most important law in Iraq".

However, the cabinet is yet to endorse deals such as revenue sharing and the creation of a national oil company.

In addition, a parliamentary boycott by some Sunni and Shia factions is expected to slow the bill's passage.

'Varied views'

The US has been pressing Iraq to pass an oil law, as part of efforts to promote reconciliation among the country's religious and ethnic groups.

But the BBC's Jim Muir, in Baghdad, says that Iraqi politics is in greater disarray than at any time since the 2003 invasion, and the bill's progress is unlikely to be smooth.

Despite assurances from Mr Maliki that the bill will be debated in parliament shortly, all Sunni factions and the 30 MPs allied to radical Shia cleric Moqtada Sadr are boycotting the chamber.

An oil refinery in the southern Iraqi city of Basra

In addition, rival groups - including Kurdish factions - also disagree on key elements of the bill.

Oil ministry spokesman Assim Jihad said different groups had "varied views on the role of the state-run oil company, the ministry, and on discovered and undiscovered oil fields".

He said these would be debated during the bill's passage through parliament.

The distribution of oil revenues is also a key concern for Sunni Arab groups, who live in areas which are mostly without oil reserves.

The original draft, approved by the cabinet in February, stipulated that a state oil company would take control of oilfields away from regional governments.

But Kurdish organisations said such moves were unconstitutional.

They reached agreement with the government in June that the authorities in Iraqi Kurdistan would receive 17% of all oil revenues.

Iraq's known oil reserves have been estimated at 115 billion barrels, but production has fallen drastically since the US-led invasion on 2003.

'Intense attack'

News of the draft law came as the US military said it was investigating the alleged killing of 10 civilians in air strikes on insurgents in the southern Iraqi city of Diwaniya to see whether "proportionate force" was used.

F-16 fighter planes bombed a street in the city on Monday after militants reportedly fired up to 75 mortars and rockets at the Camp Echo coalition military base.

Separately, the US said 23 insurgents were killed in a weekend operation in the western Anbar province.

US-led forces there said they found militants preparing for suicide attacks in the provincial capital, Ramadi.

Two US pilots were also slightly hurt when their helicopter was shot down by enemy fire near Baghdad.

After the incident, a US warplane destroyed the wreckage of the aircraft with two laser guided bombs.

In other developments:

  • At least 18 people were killed and 35 injured in a car bomb attack at a market in the Shia al-Shaab district of Baghdad, police said.
  • Human Rights Watch issued a report detailing torture and abuses at security facilities in the Kurdish area of northern Iraq
  • Two US troops died in an accident during combat operations in Anbar on Sunday
  • A car bomb targeting a police patrol in the northern oil city of Kirkuk killed two and injured at least nine people.

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