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UPDATE 2-OPEC agrees on Saudi official as new head of research

* Candidates from Qatar, Iraq, Libya also competed

* Appointment was smooth despite tensions in Gulf - sources

* OPEC has survived many internal conflicts in the past (Adds context, quote, further decisions, from paragraph 3)

DUBAI/LONDON, July 18 (Reuters) - OPEC's board of governors chose Saudi Arabia's candidate to be the group's new head of research in an appointment that went smoothly, two OPEC sources said on Tuesday, a sign political tension between Gulf members is not affecting decision-making.

Saudi Arabia's Ayed al-Qahtani was up against candidates from three other members of the Organization of the Petroleum Exporting Countries - Qatar, Iraq and Libya - for the post, which is OPEC's second most senior after the secretary general.

OPEC's talks about the post come as a dispute between Qatar and two of its Gulf Arab neighbours in OPEC, Saudi Arabia and the UAE, has raised the risk that political tension could hinder cooperation in OPEC, which is cutting output for the first time in eight years.

But the backdrop of tension between Gulf Cooperation Council (GCC) OPEC members did not affect the meeting on Tuesday. Al-Qahtani was seen as the most likely candidate given his experience, two sources said before the meeting.

"This is a GCC issue but for OPEC we carry on," another source close to OPEC said.

Saudi Arabia, the UAE, Bahrain and Egypt all cut off diplomatic and transport ties with Qatar on June 5, accusing it of financing Islamist militant groups and allying with their regional adversary Iran - allegations Qatar denies.

Al-Qahtani works at the Saudi Ministry of Energy and is a member of the Saudi OPEC delegation. He has also worked for state oil company Aramco, where he was in charge of its global economic and energy outlooks and scenarios.

OPEC, founded in 1960, sees itself as a technocratic organisation concerned with oil policy and has survived greater conflict between members in the past. Iran and Iraq were at war in the 1980s and Iraq invaded Kuwait in 1990.

More recently, political tensions between Iran and Saudi Arabia did not prevent last year's supply-cutting deal.

The OPEC governors, who met at the group's Vienna headquarters on Tuesday, also appointed an Iranian candidate as head of petroleum studies and an Algerian to head of energy studies, another OPEC source said.

They don't make decisions about production policy, which is set by the oil ministers. (Additional reporting by Ahmad Ghaddar, editing by Jason Neely and David Evans)