BASRA, Iraq (AFP) - A foreign oil worker for a United States company was hospitalised after being attacked at Iraq's biggest oil field where local residents accused him of insulting their religion, officials said on Tuesday.

Meanwhile, another US company with an employee involved in a similar incident days earlier suspended operations in Iraq.

Iraqi officials said a British employee of oil services company Schlumberger had on Monday tried to remove flags and pamphlets commemorating Imam Hussein, a venerated figure in Shi'ite Islam, just days before annual rituals marking his death.

Prime Minister Nuri al-Maliki also waded into the dispute, calling for the deportation of the oil worker, who he said was an engineer.

"A British employee took down a flag for Hussein and a picture of Imam Ali (another key Shiite figure) from the cars of the security company, and tore them down with a knife," said Mr Ali Salim Shaddad, a member of the provincial council of Basra, which is predominantly Shi'ite Muslim.

The incident took place at the Rumaila oilfield in south Iraq, where Britain's BP and China's CNPC have been working with oil services companies to ramp up output.

"This provoked a group of workers, and they went and hit him repeatedly," said Mr Shaddad.

"He was transferred to Al-Fayhaa hospital in Basra, and he is now in the custody of Iraqi forces."

Mr Shaddad said there were demands for Schlumberger's offices in Basra to be closed and its foreign staff deported.

Mr Maliki himself issued a statement calling for the oil worker to be deported, while also urging local residents to exercise restraint.

The incident follows a similar one days earlier in which an Egyptian employee of Baker Hughes, another American oil services firm, also tried to remove flags commemorating Imam Hussein and Imam Ali from vehicles he was to use.

It sparked protests which spurred the authorities to arrest the Egyptian, Mr Shaddad said, on charges of insults against religion. The case is ongoing.

Baker Hughes, which said in a statement that no injuries were suffered and its facility was secured, suspended its Iraq operations in the aftermath of the incident and declared a force majeure to its clients because of a "significant disruption of business".

"While we investigate this incident, and until the work environment has stabilised, we are halting activities in Iraq," Baker Hughes chief executive Martin Craighead said in a statement.

"We hope to resolve this issue in a timely manner, and resume operations in support of our customers and the country of Iraq, as soon as it is safe to do so."

The two incidents come amid commemorations marking the death of Imam Hussein in 680 AD at the hands of the armies of the caliph Yazid, which has over time come to mark the symbolic split between Islam's Sunni and Shiite sects.

To mark the occasion, millions of Shi'ites converge on the Iraqi city of Karbala, which houses a shrine to Imam Hussein.

Several foreign energy companies, including from the US, Britain and China, are operating on oilfields across southern Iraq as the country seeks to overcome decades of war and sanctions to boost output and fund much-needed reconstruction.