Iraq, Total Energies Sign Deal to Develop O&G Projects Costing $27 Billion

In a big push to the Iraq’s oil industry, the Ministry of Oil on Monday signed four contracts with a consortium of companies led by France’s TotalEnergies for oil and gas development and growth projects in the country at a cost of $27 billion.

The agreement was signed by TotalEnergies Chairman and CEO Patrick Pouyanne and Iraqi oil minister Hayan Abdel-Ghani at a ceremony in Baghdad. The consortium will thus be composed of TotalEnergies (45%), Basrah Oil Company (30%) and QatarEnergy (25%).

The Iraqi Cabinet approved the deal in April this year with some modifications. They include reducing the government’s share from 40% to 30%, the government’s share of $1.4 billion will be financed through a loan from the Oil Products Distribution Company and the Basra Oil Company (BOC) will be the partner on behalf of the government instead of the Iraq National Oil Company (INOC).

Though both parties signed the deal in 2021 to build four oil, gas and renewables projects, it was delayed for various reasons. Crossing all hurdles, they came to an understanding this morning.

As part of the agreement, TotalEnergies and its partners will invest approximately $10 billion (100% share) initially to recover flared gas on three oil fields to supply gas to power generation plants as part of the Gas Growth Integrated Project (GGIP), build a seawater treatment plant to provide water injection for pressure maintenance to increase regional oil production, as an alternative to the use of fresh water from rivers and aquifers.

TotalEnergies will invest in installations to recover gas that is being flared on the three oil fields and as such, supply gas to 1.5 GW of power generation capacity in a first phase growing to 3 GW in a second phase.

The financial allocation for the second part of the Common Seawater Supply Project (CSSP), estimated at about $3 billion, will be allotted in instalments for four years ($640 million, $1.57 billion, $600 million, and $190 million, respectively). TotalEnergies is responsible for the first part of the joint seawater project, which is estimated at $3 billion.

Solar Power Plant

Furthermore, TotalEnergies will develop a 1 GW solar power plant to supply electricity to the Basrah regional grid. In agreement with Iraqi authorities, TotalEnergies will invite the Saudi company ACWA Power to join this solar project.

Despite rich in natural resources, Iraq is experiencing electricity shortages while it faces a sharp increase in demand from the population and this project is expected to provide relief to the consumers.

Speaking on the occasion, Oil Minister Hayan Abdul-Ghani said that signing these contracts with the French company and its partners was important, as these efforts fall within the integrated South project, which includes four major and large projects for the oil and gas sectors.

One of the projects is the development of Artawi oil field and increase production from this field to more than 210,000 barrels per day. Artawi field produces special light oil and is considered an excellent fuel in the region.

The Iraqi Minister said that the solar power project is one of the largest energy projects in the region and the “real beginning of renewable energy investment in the country. The Minister also assured that the government will support TotalEnergies and its partners in the execution of these projects.