Iraq's best chance to boost its languishing oil output is by working with major international companies under production-sharing agreements, Iraq's deputy prime minister said on Sunday.
Barham Saleh said that Iraqi leaders were nearing agreement on a long-awaited hydrocarbon law that would allow potentially huge investments by foreign companies in Iraq's oil sector.
Saleh said he expected the law setting ground rules for managing Iraq's huge petroleum reserves would be approved in parliament by year's end.
Foreign oil companies, with their huge investment clout and latest technology, were best placed to quickly modernize Iraq's oil sector and double the current crude production of 2.5 million barrels per day by 2010, the deputy prime minister said.
"We need to engage with the major oil companies who will bring in investment as well as technology," Saleh told reporters on the sidelines of a conference of international donors in the Emirates capital Abu Dhabi. "We need to change the way we run the oil sector in Iraq."
The lack of a legal framework governing investments and ownership of the country's oil resources has hampered foreign investment in the sector.
In other developments:
Meanwhile, a bomb in a busy commercial area of central Baghdad killed five people Sunday, as wrangling forced Iraq's parliament to suspend a debate on a bill that Sunni Arab groups fear will break up the country. The roadside bomb detonated near a mobile phone shop near Tahrir Square, a popular commercial area with shops specializing in electronic goods. At least five people were killed and 17 were wounded, police Lt. Ali Metaab said.
The violence came as parliament called off a session after two major Sunni blocs boycotted the proceedings because of a dispute over a bill submitted by the country's largest group of Shiite parties.
The bill, submitted by the Iraqi United Alliance, would establish a three-way federal system in Iraq by setting up a separate autonomous state in the southern region where Shiites are dominant.
Sunni groups have said they fear the bill is an attempt to break up the country.
The Iraqi Accordance Front, parliament's largest Sunni bloc, and the National Dialogue Front of Saleh al-Mutlaq said they would not take part in Sunday's parliament session unless their own calls for amending the country's constitution were examined.
The Iraqi National List of the former secular Prime Minister Ayad Alawi, and the group headed by radical Shiite cleric Moqtada al-Sadr joined the Sunni parties in boycotting the session.
Sunni lawmaker Hashim al-Taie of the Iraqi Accordance Front said the session was suspended to seek an agreement on the day's agenda for discussion.
Lawmakers last tried to discuss the bill Thursday, but acrimonious debate forced an interruption of the session and a live broadcast from parliament to be pulled off the air.
The draft bill was not the only political dispute.
Mohamed al-Dayni, a Sunni lawmaker with Iraqi National Dialogue Front, called on the president and parliament to intervene in a dispute over the Iraqi flag, which has led to deteriorating relations between Baghdad and the country's autonomous Kurdish region in the north.
Al-Dayni told reporters that Kurds had removed the Iraqi national flag from all government buildings the border town of Mandali, which lies just outside the Kurdish region in Diyala province, about 60 miles east of Baghdad. The town has an estimated population of about 45,000, mostly Shiite Kurds.
Kurdish leader Massoud Barzani sparked the flag dispute on Sept. 1 when he ordered the country's national banner to be replaced by the Kurdish tricolor on all government buildings in his autonomous Kurdish region.
Mandali's mayor, Abdul-Hussein Abbas, denied that the Kurdish flag had been raised on any of the buildings in the town, but said that 17 of the 21 members in the local council had voted Saturday for Mandali to become a part of Kurdistan by joining the Kurdistan Regional Government.
"No official measures have been adopted yet and Iraqi flag is still hoisted on the governmental buildings," Abbas told The Associated Press, adding that "we are still part of Diyala province for the time being."
The governor of Diyala province, Raad Rashid Jawad, stressed he would not allow the town to become part of Kurdistan. "Mandali is within the geographical borders of Diyala," he said.
Iraq's Kurdish north has been gaining more autonomy since the 2003 U.S.-led invasion — a development many Iraqi leaders, especially Sunni Arabs, find particularly worrying.
The country's first interim Governing Council after the fall of Saddam Hussein decided to change the country's flag, but no official version has been adopted.