Iraq's Cabinet approved a draft law this week that is considered a key step toward developing the country's vast oil and natural gas reserves. But VOA's Barry Newhouse reports from Irbil that Kurdish officials say the agreement does not resolve how the country will divide up its oil revenue.

The draft law approved Monday addresses the process for developing Iraq's oil and natural gas reserves, which are estimated to be the third largest in the world.

The agreement says the central government and regional governments can negotiate contracts with foreign oil companies, but all contracts must also be approved by a yet-to-be created council in Baghdad.

Kurdish officials say the deal does not address how the government will divide the revenues from those contracts among Iraq's central and regional governments.

Khaled Salih

Kurdish regional government spokesman Khaled Salih says that agreement will be worked out under a so-called "Revenue Sharing Law" that has not yet been approved by the Iraqi Cabinet.

He says, once the Cabinet has approved the revenue-sharing agreement, both it and the draft oil law will be sent together to Iraq's parliament.

In a statement on the Kurdish regional government Web site, officials said they hope both laws will be approved by the Iraqi parliament in two months.

The process for dividing Iraq's vast energy wealth plays a major role in determining the country's future. Kurdish officials say the revenue-sharing agreement is expected to be based on population distribution.

But the government has not conducted a nationwide census in several years - during a time when hundreds of thousands of Iraqis have left their homes and moved elsewhere in the country or abroad.

Despite the unresolved issues, the Kurdish government spokesman says the oil draft law moves toward ensuring that groups, which had been cut-out of Iraq's oil wealth in the past will not lose out in the future.

He says, "The main point was to protect our rights, not only for the Kurds, but for other ethnic groups. If we protect their rights, we also protect our rights."