Iraq's parliament is expected to start soon debating a controversial draft law setting up a new national oil company, a leading Iraqi lawmaker told Dow Jones Newswires Tuesday.

"We have submitted the draft law of the company to the parliament's presidency in order to start debating it," said head of the newly formed parliament's oil and energy committee Adnan al-Janabi.

A draft law of the long-awaited new national oil company, which would revive a company originally established in the 1960s and merged into the Iraqi Oil Ministry in 1987, was passed by the former cabinet in July 2009 but has been stalled in the parliament since.

Janabi didn't elaborate on the draft law of the Iraqi National Oil Co. However, an Iraqi oil expert who took part in drafting the law, said that the INOC would act as the parent of the existing South Oil Co., Iraq's largest petroleum co., North Oil Co., Missan Oil Co. and Midland Oil Co.

It would spearhead national and local strategy, the expert said, adding that it would also carry out all sorts of oil operations from exploration down to marketing. The firm would also partner with or even compete against foreign companies to develop Iraqi fields, he added.

Janabi, a veteran Iraqi oil specialist who has spent most of his career with the oil ministry, hoped that a more controversial draft hydrocarbon law would be also debated and approved by the parliament this year.

The draft law was initiated by the former government more than two years ago but it never moved past being debated because of a bitter dispute among the assembly's Shiite, Sunni and Kurdish factions over the sharing of Iraq 's oil wealth.

Janabi said that his committee along with experts from the Baghdad 's Oil Ministry is studying and amending the draft law which was initialed more than two years ago. He didn't elaborate.

"There is a harmony among political parties to debate and approve the draft oil law this year," he said.

Iraq 's central government approved a few years ago, a version of the draft law but faced stiff opposition from the Kurdistan Regional Government in northern Iraq , which felt it was getting a raw deal.

The hydrocarbon law is important to settle a dispute between Baghdad and the regional government in Kurdistan . Baghdad doesn't recognize scores of deals signed by the KRG with foreign companies. The central government wants to review these Kurdish deals and bring them in line with oil laws valid in Baghdad .

Kurdish officials want the new hydrocarbon law to be passed by the end of June this year.

Over the last 18 months, Baghdad has signed multi-billion oil deals with some of the world's largest oil companies with the hope of boosting the country's output to 8 million barrels a day in 2018 from the current 2.6 million barrels a day.

Foreign investment is just starting to trickle in, but even with the rare promise of massive, untapped fields, global firms are wary of continuing violence and the murky legal and regulatory framework underlying operations in Iraq .

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