Iraq on Thursday threatened not to consider Reliance Industries [Get Quote] for oil contracts after the company struck a deal with the Kurdish regional government, but the Indian firm said the agreement conformed to law.

"Our position is very clear. Any company that signs oil contracts (with regional governments) without federal government approval will compromise their chances of getting future oil contracts in Iraq," its Oil Minister Hussain Al-Shahristani said in Riyadh.

Hussain, who is here to attend the OPEC meeting, said that Baghdad had conveyed this Reliance Industries. RIL, which last week signed the contract for the blocks Rovi and Sarta in northern Iraq with the autonomous Kurdish regional government, said that the agreements "are within the legal framework."

"Reliance has always maintained highest cordial relationship with the government of Iraq and all other stakeholders in the countries where we operate. We will continue to do so in future," RIL said.

The blocks, measuring 517 and 607 sq km respectively, have almost 80 per cent oil bearing structure and RIL has paid a signing amount of $15.5-17.5 million for the two.

"Iraq will not allow its oil to be exported without federal government approval. We have informed and warned them of the consequences. They will not be able to take oil out of the country," the minister said.

The Kurdish region is located in land-locked northern Iraq and has no port facilities, which makes evacuation of oil and gas without Baghdad's approval virtually impossible.

"There is no legislative vacuum in Iraq... these contracts have no standing with the Iraqi government," Hussain said.

Besides the two blocks to RIL, the Kurdish regional government had awarded five other blocks to foreign companies defying Baghdad's proposed new oil law. The federal government opposes unilateral sell-off of crude blocks in the absence of a national oil law, which is yet to be passed by Parliament.

Share price of RIL, India's most valued company, on Thursday fell 0.55 per cent to Rs 2,871.70 at the Bombay Stock Exchange in an overall bearish market.