NEW YORK, March 21 (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, 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 Republican

state and federal officials and Wall Street firms over using

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.

BlackRock ( BLK ) said state law did not require the divestment

because the funds' outperformance showed "divestment would not

be in the best interest of Texas PSF".

Letters sent by PSF to BlackRock ( BLK ), dated March 19 and seen by

Reuters, requested termination of contracts to manage

investments in international equities and one specific fund,

without giving a reason.

BlackRock ( BLK ) had $10 trillion of assets under management at the

end of 2023. McCombe said it had $320 billion in energy

investments globally, and $120 billion in Texas-based public

energy companies.

Just last month, Chief Executive Larry Fink appeared with

Texas Lieutenant Governor Dan Patrick at an event in Houston

aimed at stoking investment in the state's power infrastructure.