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By Isla Binnie

NEW YORK (Reuters) - A senior BlackRock ( BLK ) executive said on Thursday the world's largest asset manager was "dismayed" by a Texas state fund's move to pull $8.5 billion in assets from its management, and urged the fund's administrators to reconsider.

Texas State Board of Education Chair Aaron Kinsey said on Tuesday the Texas Permanent School Fund (PSF) was terminating a contract with BlackRock ( BLK ), covering around 15% of its assets, to comply with a 2021 state law that curbed agencies' business with financial firms accused of boycotting energy companies.

It was the latest broadside in a tussle between politically conservative officials and Wall Street firms over considering environmental, social and governance (ESG) factors in investing.

BlackRock ( BLK ) Vice Chairman Mark McCombe wrote to Kinsey on Thursday that the firm had generated $250 million for PSF since 2006 and repeated previous rejections of the allegation it discriminates against oil and gas firms.

"We urge you to reconsider your decision and prioritize Texas schools and families who have benefited from BlackRock's ( BLK ) consistent, long-term investment out-performance," McCombe wrote in the letter.

Kinsey said he made the move to fulfil his duty to manage money for the energy-producing state.