The government of Iraq's semi-autonomous northern Kurdish region has criticized a draft oil law approved by the Iraqi cabinet last month which would centralize control of most of the country's vast oil reserves.
The Kurdistan Regional Government (KRG) called on Iraq's parliament to reject the long-awaited law, saying it contradicted the "essence of the constitution".
The new hydrocarbons law is seen as crucial to the Opec producer's efforts to rebuild after years of war by giving investors more solid legal guarantees. It has been in the making for years but has faced opposition over who controls the world's fourth largest oil reserves.
Much of the opposition has come from Kurdistan, where the government has signed its own contracts with foreign oil companies that the central government in Baghdad deems illegal.
The KRG accused Iraq's cabinet of "fooling its members" by reviewing an important draft in only a few minutes time, a statement issued by the KRG said, Reuters reported.
"In the absence of a federal oil policy for more than six years and unjustified delays in passing the federal oil law ... we were caught by surprise by the Cabinet action in approving a draft, in absence of most members, which is totally contradictory to the draft law agreed before," it said.
Iraq's cabinet approved the draft in late August and sent it to parliament for final passage. The KRG rejection could hamper efforts to reach a final deal any time soon, Reuters reported.
The draft law was first approved by cabinet in 2007 but faced opposition in parliament and was sent back to the government for amendments.
The KRG accused Baghdad of breaching political agreements and trying to centralise decision-making.
"The presidency of the Kurdish region denounces this manoeuvre and calls upon the cabinet to withdraw the draft law proposed by the oil ministry immediately, as it contradicts the essence of the constitution," the statement said. "We demand that the parliamentary presidency reject the draft law."
The Kurdish government did not specify how the law violated the constitution or past agreements, Reuters reported.
Investors have been waiting for the law's approval to assure a more stable legal framework for exploration. The law is also seen as pivotal to reconciling Iraq's factions – especially Iraqi Arabs and Kurds – as the country rebuilds after years of war.
Even without the law, Iraq is already developing oilfields, signing billions of dollars in contracts with international companies under legislation dating back to before the 2003 US-led invasion that ousted Saddam Hussein.