BAGHDAD, Iraq - Insurgents detonated explosives on an oil well in northern Iraq, sparking a fire that raged for 24 hours before being extinguished, a senior Iraqi security official said today.

U.S. troops and Iraqi insurgents fought in Fallujah, west of Baghdad, today, and heavy gunfire and explosions were heard, witnesses said.

Witnesses said shooting erupted when U.S. Marines moved into the center of the city. American troops rarely venture into downtown Fallujah, one of the most dangerous areas in Iraq for the U.S. military.

Wednesday's oil well attack was the latest on the petroleum industry, which is crucial in helping to fund reconstruction work in this war-shattered nation.

Rebels also have targeted Iraqi police and some 350 U.S.-trained officers have been killed in the past year, the U.S. military said. Attacks are expected to increase before the coalition hands over sovereignty on June 30. The latest American casualty was a soldier who died in a bomb explosion north of Baghdad.

The blast on the Northern Oil Company well in the Khabaz area, about 55 miles west of Kirkuk, occurred Wednesday night, said Gen. Mohammed Amin, the Iraqi Civil Defense Corps chief in Kirkuk. The fire was extinguished late Thursday.

The well was not being tapped at the time of the blast and was not closely guarded, he said.

"This is a terrorist act. This is the first time an oil well has come under attack in Kirkuk," Amin said.

He accused remnants of Saddam Hussein's regime of being behind the attack, but offered no proof. The attack "is a sign that some strategic locations will be attacked. So, we are going to tighten security on places that are considered national resources," he said.

Kirkuk is in one of Iraq's main oil producing regions. Rebels have targeted the oil industry in the country's north and south, blowing up pipelines, killing oil workers and firing rockets at the oil ministry building in Baghdad.

Oil is Iraq's most valuable export, and the country must sell more to pay for rebuilding an economy shattered by wars, sanctions and misrule. Confronted with political tensions and terror attacks, Iraq's Governing Council and its American backers recognize that rising oil revenues are essential to the creation of jobs and social stability.

Insurgents have struck police north and south of the capital this week; two police who were twin brothers and a provincial police chief were killed and a van carrying police recruits was ambushed, killing nine.

Guerrillas view the Iraqi security forces as collaborators with the U.S.-led occupation. Iraqi police also often make easier targets because they are less well-armed and protected than the U.S. troops, who sometimes accompany them on patrols.

Insurgents "know that police are the authority, force and law, and for this reason they carry out these acts," said Nouri Jaber al-Nouri, inspector general of the Interior Ministry.

Brig. Gen. Mark Kimmitt, the U.S. military's deputy director of operations, said the killings were "clearly a program of intimidation and targeting of not only the Iraqi police service, but all Iraqi government officials."

On Thursday, a U.S. soldier died and two others were wounded when a homemade bomb exploded near Baqouba, the American military said. The soldiers went to the area after Iraqi ICDC forces notified them that a homemade bomb had been found. The two injured soldiers were in stable condition.

Nearly 600 U.S. service members have died since the beginning of military operations in Iraq a year ago, according to the U.S. Defense Department. Of those, about two-thirds have died as a result of hostile action.

Also today, the U.S. Department of Defense announced the awarding of a $500 million contract to Pasadena, Calif.-based Parsons Delaware Inc. for the construction and renovation of public buildings, hospitals, health-care clinics and housing throughout Iraq.