By Ahmed Rasheed

BAGHDAD, May 2 (Reuters) - The Iraqi government has sent to parliament a landmark draft oil law, the oil minister said on Wednesday, a major step towards meeting one of the political benchmarks Washington has set for Baghdad.

Parliamentary officials, however, said they were unaware the bill had been submitted to the legislature.

The draft law, crucial to regulating how wealth from Iraq's vast reserves would be shared by its sectarian and ethnic groups, was passed by cabinet in February and hailed at the time by Prime Minister Nuri al-Maliki as a pillar of Iraqi unity.

But a dispute between the central government and autonomous, oil-rich Kurdistan over control of the world's third largest oil reserves has delayed its submission.

Speaking to reporters in Saudi Arabia, Oil Minister Hussain al-Shahristani said Kurdish officials were happy with the law, adding he hoped it would pass by the end of May.

"It has been sent to parliament now. There has been agreement among the political parties to work together to enact it by the end of the month. We are still hoping that parliament will be able to do that," Shahristani said.

"The KRG (Kurdish regional government) is not opposed to the draft law. On the contrary, they are very happy with the draft law."

U.S. President George W. Bush, who on Tuesday vetoed legislation that would have set dates for the withdrawal of U.S. troops in Iraq, is pressing Iraqi leaders to agree on power-sharing agreements to help ease violence in Iraq.

Haider al-Ibadi, a lawmaker and head of the economic and investment commission in parliament, told Reuters the parliament had not received any draft yet.

"The parliament hasn't received the original draft yet," he said, adding he expected the cabinet would meet tomorrow to send the draft to parliament.

There was no immediate comment from Kurdish officials, who have said annexes in the draft are unconstitutional because they wrest oilfields from regional governments and place them under a new state oil company.

Kurdish officials had warned they would try to block the bill, which is also vital to attracting foreign investment to boost Iraq's oil output and rebuild its shattered economy.

Besides the oil law, Washington's benchmarks include rolling back a ban on former members of Saddam Hussein's party holding office, reforming the constitution and calling provincial polls.

An equitable distribution of Iraq's oil wealth is seen by Washington as key to easing sectarian violence that has pitched the country to the brink of all-out civil war.

Most oil reserves in Iraq are in the Kurdish north and Shi'ite south. Once-dominant Sunnis, who make up the backbone of the insurgency, fear a bad deal with seal their political doom.

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