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.

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 US-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. – Reuters