According to Reuters, 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 law is key to the OPEC producer's efforts to rebuild after years of war by giving investors more solid legal assurances. It has been in the making for years but has faced opposition over who controls the world's fourth largest oil reserves.
Most of the opposition has come from the KRG, where the government has signed its own contracts with foreign oil companies that the central government in Baghdad deems illegal. The KRG issued a statement accusing Iraq's cabinet of "fooling its members" by reviewing the draft in haste.
The statement said: "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."
The cabinet approved the draft in August and sent it to the parliament for ratification. The KRG rejection could hamper efforts to reach a final deal any time soon. The KRG accused Baghdad of breaching political agreements and trying to centralise decision-making.
The statement, added: "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…We demand that the parliamentary presidency reject the draft law."
Sources: Upstream Online, Reuters
For more news and expert analysis about Iraq, please see Iraq Focus.
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