Spain's Repsol is the latest large international oil group to eye potential investments in the semi-autonomous Kurdish region of Iraq, sources familiar with the matter said.

Repsol's move, which risks it being blacklisted from investment in the rest of Iraq, follows recent investments in Kurdistan by US-based Marathon Oil and Murphy Oil.

Repsol has eyed a number of potential blocks for investment, the sources said. It could buy a stake in a field already being explored by another company or it could acquire a new block from the Kurdistan Regional Government (KRG).

Kurdistan, which achieved a form of self-government after the first gulf war, began issuing oil licenses shortly after Saddam Hussein was toppled, initially attracting investments from only small explorers.

The KRG says its contracts are in compliance with Iraq's constitution but Baghdad has described them as illegal, and excluded oil companies which invested in the region from bidding for contracts in the south.

Although the south offers larger prospects than Kurdistan, tough competition from big international companies and stringent contract terms have deterred some investors.

Kurdish leaders are currently in talks with Prime Minister Nuri al-Maliki about forming a new government that would be led by Maliki, and recognition of oil contracts are one of their key demands.-Reuters