Baghdad: Iraq and French oil major TotalEnergies on Monday signed a long-delayed $27 billion energy deal that aims to increase oil production and boost the country’s capacity to produce energy with four oil, gas and renewables projects.
Initially signed in 2021, the deal has faced delays amid disputes between Iraqi politicians over the terms, but was finally closed in April when Iraq agreed to take a smaller than initially demanded stake in the project of 30 per cent.
TotalEnergies took a 45 per cent stake and QatarEnergy holds the remaining 25 per cent.
TotalEnergies Chairman and CEO Patrick Pouyanne signed the agreement with Iraqi oil minister Hayan Abdel-Ghani at a ceremony in Baghdad, with Pouyanne calling it a “historic day”.
He said the project would break ground this summer and would see an investment of $10 billion over the next four years.
“This is the starting day, and we’ll deliver the projects in the next four years for the benefit of everybody in Iraq,” he said.
The Gas Growth Integrated Project (GGIP) aims to improve the country’s electricity supply, including by recovering flared gas at three oilfields and using the gas to supply power plants, helping to reduce Iraq’s import bill.
TotalEnergies said it would also develop a 1 GW solar power plant to supply electricity to the Basra regional grid, inviting Saudi company ACWA Power to join the project.
“It is the real beginning of investment in renewable energy in Iraq,” Abdel-Ghani said of the solar project.
The GGIP includes a treatment plant that will enable drought-stricken Iraq to use seawater in the water-intensive oil production process instead of limited freshwater from rivers and marshes.
“I hope that this will be a strong signal to other investors to come to Iraq,” Pouyanne said.
Exxon Mobil, Shell and BP have all scaled back their operations in Iraq in recent years, contributing to a stagnation in oil production.
Iraq’s oil production capacity has remained at around 5 million barrels per day in recent years.
Yet at one time there had been hopes of rivalling top producer Saudi Arabia with its output of 12 million bpd, more than a tenth of global demand.
The newly-inked deal includes plans to up oil production capacity at Basra’s Ratawi field to 120,000 barrels per day (bpd) in two years and then to 210,000 bpd within four years, Pouyanne said.