China Sinopec Group's $7.24 billion acquisition of Swiss oil firm Addax Petroleum Corp was approved by the Iraqi government, a local paper quoted a senior Sinopec official as saying on Wednesday.
The remark came in response to a Reuters report late on Monday that Iraq's Oil Ministry said it would blacklist Sinopec and bar it from new oilfield tenders if it confirmed the purchase of the Swiss firm, which is active in the semi-autonomous Kurdistan region in northern Iraq.
The Oil Ministry is committed to not dealing with any oil company that signs oil contracts (with the Kurdish Regional Government) without the approval of the central government and Iraqi Oil Ministry, Deputy Oil Minister Abdul Karim Louaibi told Reuters in Istanbul.
The reaction of the ministry will be clear, Sinopec will be blacklisted.
But the China Business News quoted the Sinopec official as saying Sinopec's commercial operations are unrelated to the conflicts between the Iraqi government and Kurdistan. The report did not say who in the Iraqi government had purportedly approved the deal or when.
Iraqi government officials could not be reached to comment on the China Business News report.
In Istanbul a day earlier, however, Oil Minister Hussain al-Shahristani repeated the comments of his deputy.
The position of the Iraqi government is any company that does not respect the Iraqi laws, does not observe the Iraqi laws, will not be allowed to work in Iraq and will not be qualified in our bid rounds or for any deal with the Ministry of Oil, he said, speaking to reporters in English.
Asked about Sinopec's prequalification to compete in a second round of oilfield tenders, he said, Well, for a company qualified (which) then breaches one of the criteria of qualification, it will be disqualified.
He added with regard to Sinopec: We are investigating if they breached any requirements of the qualification. Then any company could be disqualified again.
Sinopec Group, parent of Sinopec Corp, agreed in late June to buy Addax in China's biggest overseas acquisition.
Analysts have warned that Addax's assets in the Kurdish blocks, including the Taq Taq field that has the potential for a sharp production increase, carry political risks that could prompt Sinopec to sell them to another party.
Sinopec participated in Iraq's oil licensing round in late June, the first since the 2003 U.S.-led invasion, along with China's other oil majors and many international oil firms. Iraq only awarded one contract to a consortium of BP and China's CNPC.
(Reporting by Chen Aizhu; Additional reporting by Ahmed Rasheed in Baghdad; Editing by Ken Wills)