Iraq's Oil Ministry will blacklist China's Sinopec Corp and prohibit it from competing in a second bidding round for oilfield tenders if it confirms its purchase of Swiss oil explorer Addax Petroleum Corp, a senior Iraqi oil official said on Monday.
Deputy Oil Minister Abdul Karim Louaibi told Reuters the ministry had sent Sinopec a letter asking it about Addax, which is among foreign oil firms that have signed independent oil deals with semi-autonomous Kurdish authorities 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," Louaibi said in Istanbul. "The reaction of the ministry will be clear, Sinopec will be blacklisted."
The Shi'ite-led Iraqi federal government is embroiled in a potentially explosive dispute with ethnic Kurds over land, power and the country's vast oil wealth. The Iraqi Oil Ministry deems production sharing agreements signed by the Kurds in their northern enclave to be illegal.
Sinopec, China's largest oil refiner, announced in June that it had agreed to buy Addax for around $7 billion. The Chinese firm announced the completion of the buyout recently. Addax is a significant player in Kurdish oilfields. Sinopec's spokesman in Beijing could not immediately be reached for comment. Louaibi said the Oil Ministry had not yet received a reply from Sinopec to its letter.
Asked what might happen to Sinopec's pre-qualification for a second round of Iraqi oilfield tenders, expected to be auctioned off in November, Louaibi said, "It's up to them, they have a choice." "But if they are blacklisted then they will lose the chance to compete in the second bidding round," he said.
Louaibi and other Iraqi oil officials were in Istanbul to meet with international oil company executives and to showcase their plans for the second round of contracts. A first round of oilfield contracts at the end of June proved to be disappointing to global oil firms when they found out how little Baghdad was willing to pay them for developing the fields. Only one oilfield out of six on offer was awarded.