Iraq, TotalEnergies ink $27 billion deal to build four energy projects

Iraq and French oil major TotalEnergies on Monday signed a long-delayed $27 billion agreement to build four oil, gas and renewables projects.

The deal was signed in 2021 with an initial investment of $10 billion in southern Iraq over 25 years, but it was delayed amid disputes between Iraqi politicians over terms, Reuters reports.

TotalEnergies Chairman and CEO Patrick Pouyanne signed the agreement with Iraqi oil minister Hayan Abdel-Ghani at a ceremony in Baghdad, with Pouyanne hailing it a “historic day.”

The deal was closed in April, when Iraq agreed to take a smaller than initially demanded stake in the project of 30 percent, with TotalEnergies taking a 45 percent stake and QatarEnergy holding the remaining 25 percent.

The Gas Growth Integrated Project (GGIP) aims to improve the country’s electricity supply, including by recovering flared gas on three oilfields to supply power plants.

TotalEnergies said it would also develop a 1 GW solar power plant to supply electricity to the Basrah regional grid, inviting Saudi company ACWA Power to join the project.

Inking the deal during a ceremony in Baghdad, Iraqi Oil Minister Hayyan Abdul Ghani and TotalEnergies CEO Patrick Pouyanne exchanged positive remarks regarding the project, which will see the energy giant build four projects for oil, gas, and renewables in southern Iraq over 25 years, largely focusing on developing Iraq’s lackluster gas infrastructure and capturing the waste product known as associated petroleum gas, which is extremely damaging to the environment and contributes to climate change, for usage. 

“We have demonstrated in the last 20 months that the continuity of the force of the State of Iraq on this development and construction contract has been a reality, and it is a very strong signal to invest,” Pouyanne said, adding that the project will provide plenty of job opportunities as at least 80 percent of its workforce will be local. 

“We reiterate our commitment to providing a suitable environment for international companies working in Iraq and to cooperate with them to evolve the oil, gas, and green energies industries in Iraq,” Ghani said, echoing Pouyanne’s remarks by encouraging foreign investment. 

The GGIP encompasses the development of gas, the production of crude oil, and the usage of seawater for the equipment of the fields for oil purposes. It also consists of a facility processing 600 million cubic feet of gas per day, which is expected to be completed in two stages over five years. 

Initially signed in 2021, the contract faced a delay due to disagreements over Iraq’s stake in the deal as Baghdad demanded a 40 percent share. It was finally agreed upon in early April after five rounds of talks between Pouyanne and Iraqi Prime Minister Mohammed Shia’ al-Sudani.

According to the terms of the deal, TotalEnergies will initially invest $10 billion to recover flared gas from oilfields in southern Iraq.