TotalEnergies confirms $10 billion investment in Iraq oil fields, solar plant
TotalEnergies has confirmed that it will make an initial investment of $10 billion in three oil fields in Iraq and develop a solar energy plant to supply the Basrah regional grid in the south of the country, as part of a $25 billion deal with the Iraqi government and QatarEnergy.
Reports emerged on Tuesday that the French energy giant had struck a deal with the Iraqi government to work on the $27 billion energy project, with the state taking a 30% stake.
The Iraqi government initially wanted a 40% stake in the project, which collapsed due to a dispute over the terms of the agreement.
The $27 billion Integrated Gas Growth Project (GGIP) agreed in September 2021 was created to develop Iraq’s natural resources and improve the country’s electricity supply.
In a statement issued on Wednesday, TotalEnergies confirmed that CEO Patrick Pouyanné met with Iraqi Prime Minister Al-Sudan four times to agree on the terms of the contract.
“The Government of Iraq and TotalEnergies have agreed on a 30% share for the Basrah Oil Company (BOC) in the GGIP. In addition, in agreement with the Government of Iraq, TotalEnergies invited QatarEnergy to take a 25% stake in the GGIP,” the statement said.
Therefore, TotalEnergies will have a 45% stake in the project. The Iraqi government, through its southern subsidiary BOC, will hold a 30% stake, while QatarEnergy will hold the remaining 25%, subject to regulatory approval.
TotalEnergies and its partners will invest about $10 billion to recover flaring gas on three oil fields in southern Iraq to help power generation plants.
The funds, which will be invested over the next ten years, will also go towards building a seawater treatment plant to provide water to increase regional oil production.
TotalEnergies will also develop a one-gigawatt solar power plant to supply electricity to Basrah’s regional grid and will invite the Saudi company ACWA Power to join the project.
“TotalEnergies welcomes the continued voice of the State of Iraq on this Development & Production Contract, which is a strong and positive sign for foreign investment in the country,” the statement continued.
Saad Sherida Al-Kaabi, Qatar’s energy minister as well as QatarEnergy’s president and CEO, said, “We are pleased to be part of this significant development, which is important for Iraq’s energy sector, and we look forward to working with TotalEnergies and Basra. Oil Company to bring it to fruition.
“I would like to express our gratitude to the Government of Iraq for their invaluable support in reaching this point, and for the trust they have placed in QatarEnergy as a reliable partner.”
Al-Monitor is in contact with the ACWA, the Iraqi Ministry of Oil and TotalEnergies for further comments on the project.
Iraq is OPEC’s second largest producer, pumping an average of 3.3. million barrels per day (bpd). The government hopes the GGIP will help the country produce higher volumes in the future after output stagnated in recent years after BP, ExxonMobil and Shell scaled back their operations there.
On Sunday, OPEC+, the 23-member group that includes Iraq, Kuwait, Russia, Saudi Arabia and the United Arab Emirates, said it would cut oil production by an additional 1.16 million barrels per day in a surprise decision that was criticized by the United States. As part of the announcement, Iraq promised to cut output by 211,000 bpd.