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Baghdad blacklists Sinopec

Iraq has banned China's Sinopec from the country's second bidding round because the state-run player has yet to ditch a contract in Iraq's northern Kurdistan region inherited when it took over Addax Petroleum, Iraq's Deputy Oil Minister Abdul Kareem al-Leaby said.

"I think yes," Leaby told Dow Jones when asked if his ministry would bar Sinopec from taking part in the country's second licensing auction expected to take place later this year.

Abdul Manhdy al-Ameedi, the deputy head of the ministry's petroleum contracts and licensing directorate, which is in charge of Iraq's bidding rounds, confirmed that the ministry has blacklisted Sinopec.

"Sinopec is blacklisted unless it changes its position and withdraw from these (Kurdish) contracts," he told the news agency.

Sinopec had written to the ministry saying "it would correct its position" but the ministry was not convinced by their answer, he said.

He added that Sinopec had violated ministry regulations by acquiring contracts in the Kurdistan region which are not approved by the federal government in Baghdad.

Huang Wensheng, a spokesman for Sinopec's parent company Sinopec Group, told Dow Jones he had no knowledge of the oil round development.

Meanwhile, an Iraqi oil official said the ministry had sent a letter to Sinopec earlier this month warning that if it did not abandon the Kurdish contract, it would be blacklisted.

"We still hope that Sinopec would give up its Kurdish contract," the official said.

He said the ministry would hold a workshop in Istanbul on 18 and 19 October to discuss the second bidding round. He said 15 oil and gas fields were on offer in the round, including some of Iraq's largest. It is likely Sinopec would be prevented from taking part in that meeting, he said.

Addax signed a contract with the semi-autonomous Kurdistan Regional Government (KRG) in northern Iraq, which has angered the central government in Baghdad. The central government has said deals struck with teh KRG are not valid because they have not been approved by the Baghdad government.

However, the Kurds say the deals are legal and in line with the country's new constitution.

Sinopec is one of 45 international oil companies prequalified to take part in bidding.

"We have cancelled Sinopec's prequalification," Ameedi said.

The ministry official said most of the 45 companies have bought data packages prepared by the Oil Ministry on the oil and gas fields listed in the second bidding round.

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