Iraq’s cabinet has blocked the signing of an exploration contract for Block 9 in the south of the country, and has expelled Turkey’s TPAO from the winning consortium.

The expulsion of TPAO has been seen as a sign of worsening relations between Baghdad and Ankara. There are a number of factors souring the relationship, including Turkey’s growing ties with the semi-autonomous Kurdistan region of northern Iraq, as well as Iraq’s response to the conflict in Syria.

A consortium led by Kuwait Energy Company won the contract for Block 9 in Iraq’s fourth licensing round in May this year. Kuwait Energy holds a 40 per cent stake in the block, along with 30 per cent stakes for TPAO and the UAE’s Dragon Oil.

The 900-square-kilometre block is just 20km from Basra city and 140km from the Al-Fao storage facility in the south of Iraq.

Block 9 is now the only awarded block left unsigned from the May bid round. The decision not to sign the contract was made by the cabinet, and was not based on technical reasons, according to Abdul Mehdi al-Ameedi, director of Iraq’s Petroleum Contracts & Licensing Directorate (PCLD).

“This decision is final and there is no approval to sign the contract for Block 9,” said Al-Ameedi, according to local press reports.

However, Kuwait Energy and Dragon Oil could raise their own stakes in the consortium to cover the loss of TPAO.

Iraq has already finalised the other exploration contracts awarded. Block 8 in central Iraq, 110km from Baghdad, was signed by Pakistan Petroleum on 5 November. Russia’s Lukoil along with Japan’s Inpex Corporation signed a contract for exploration at Block 11, in the south of Iraq.

Russia’s Bashneft was awarded a deal for Block 12 near the southern city of Nassiriya in July. Its contract has yet to be signed by the cabinet.