Iraq sends oil law to parliament

By Ahmed Rasheed

BAGHDAD (Reuters) - The Iraqi government has sent a draft oil law to parliament, a major step towards meeting one of the political benchmarks Washington has set for Baghdad.

The announcement by Oil Minister Hussain al-Shahristani on Wednesday came on the eve of a major conference in Egypt where industrialised powers and Iraq's neighbours will discuss how to stabilise Iraq and seek reforms in return for reconstruction.

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

It was passed by cabinet in February and hailed at the time by Shi'ite Prime Minister Nuri al-Maliki as a pillar of Iraqi unity. But a dispute between the central government and autonomous, oil-rich Kurdistan over control of the world's third largest oil reserves has delayed its submission.

U.S. President George W. Bush, who on Tuesday vetoed Democrat-backed legislation that would have set dates for the withdrawal of U.S. troops in Iraq, is pressing Maliki to approve power-sharing agreements to help ease violence.

A day after Bush called such a timetable "rigid and artificial," the U.S. military announced on Wednesday the arrival of nearly 4,000 extra soldiers in Iraq as part of the White House's troop "surge", seen as a last-ditch effort to avert a civil war between majority Shi'ites and minority Sunni Arabs who were dominant under Saddam Hussein.

Speaking to reporters in Saudi Arabia, Shahristani said he hoped the oil bill would pass by the end of May.

"It has been sent to parliament now. There has been agreement among the political parties to work together to enact it by the end of the month," Shahristani said.