KIRKUK, Iraq (AFP) -- Iraq on Monday named a new chief for the state-run North Oil Company, angering employees and sparking concerns of sectarian tensions in the firm's ethnically-mixed headquarters town of Kirkuk.

Hamid al-Saadi's appointment was announced alongside the promotion of three other senior oil sector officials to key posts, and comes as Iraq seeks to ramp up its oil output five-fold in the coming seven years.

Saadi, a Shiite Muslim, replaces Manaa al-Obaydi, a Sunni, who is retiring, prompting concerns among employees in Sunni-majority Kirkuk, a potential flashpoint because of its competing ethnic groups.

"Hamid al-Saadi is considered one of the foremost experts in the oil sector after having spent more than 40 years with the North Oil Company (NOC)," oil ministry spokesman Assem Jihad told AFP.

Jihad added that the directors of the oil ministry's exploration arm, its technical office and its bidding and contracts division had all also retired and been replaced.

Saadi's appointment, however, spurred several employees at the NOC's headquarters to threaten protest.

"We reject his appointment," said transportation chief Sabah Abdel Ali.

"The situation in Kirkuk is complicated and dangerous, the city is part of the contested zone. We need consensus here and not additional problems," he said.

"We will protest in the face of these changes."

Kirkuk is at the centre of a territorial dispute between Iraq's central government in Baghdad and the autonomous Kurdish region, both of which claim it as their own.

The city has a mixed population of Arabs, Kurds and Turkmen, and long-standing Kurdish demands for it to be incorporated into their region have fanned tensions.

But oil ministry spokesman Jihad said there was no need for concern, and stressed that NOC represents all of Iraq, not just one region.

"The North Oil Company is not simply Kirkuk. Its area extends from the border of Maysan province (south Iraq) up to the northern tip of the country."

"A director can be from any part of Iraq. We have to adapt to the talent we have, regardless of where he came from.

Iraq is looking to increase its oil production from current levels of around 2.5 million barrels per day (bpd) to 12 million bpd within seven years, after having reached agreement with foreign energy firms last year to extract crude from 10 oil fields.