Iraq parliament warns government over delayed oil law

* Oil law delayed by disputes over reserves

* Investors see hydrocarbons law as guarantee

BAGHDAD, July 31 (Reuters) - Iraq's parliament on Sunday warned the government it would force through a new draft of a much-delayed oil law if the cabinet further hold up the original legislation that investors see as a key guarantee of stability.

A new hydrocarbons law has been in the making for years but has faced opposition over who controls the world's fourth largest oil reserves, some in areas disputed by ethnic Arabs and Kurds and and some in Iraq's semi-autonomous north.

"Parliament's energy committee has proposed a new draft and if government further delays its submitting of the oil and gas law then we will go with new one," Iraq parliament speaker Osama al-Nujaifi told reporters.

The oil law has been one of many contentious issues facing Iraq's new multi-sectarian government since it was formed in late December following more than nine months of wrangling and an inconclusive election.

Investors have been waiting for the law's approval to guarantee a more solid legal framework for exploration. The law is also seen as pivotal to reconciling Iraq's political factions as the OPEC country rebuilds after years of war.

Even without the law, Iraq is already developing oil-fields, signing billions of dollars in service contracts with international companies under legislation dating back to before 2003 when a U.S. invasion ousted Saddam Hussein.

The draft oil law was approved by the cabinet in 2007 but faced opposition in parliament which sent it back to the government for amendments. Last month, Iraq made some changes to the law, which are being reviewed by the cabinet's energy committee.

"It's clear parliament is trying to pressure the government to unchain the long-delayed law, but this will not solve the issue, It's just creating more chaos," Baghdad-based oil analyst Hamza al-Jawahiri told Reuters.

"Parliament should understand the only way out of this issue is through a political deal with the Kurds," he said. (Reporting by Waleed Ibrahim and Ahmed Rasheed; Editing by Patrick Markey and Jon Hemming)