French energy giant TotalEnergies signed a $27bn deal with Iraq on Monday with the aim of increasing oil production and energy capacity. The deal will cover four oil, gas and renewables projects.
The contract was initially signed in 2021 but faced a number of delays as Iraq’s politicians contested the terms of the agreement. The deal was closed in April, when Iraq agreed to take a 30% stake in the project, lower than it initially demanded.
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TotalEnergies took a 45% stake and QatarEnergy holds the remaining 25%.
The deal has an initial investment of $10bn centred around the Gas Growth Integrated Project. The scheme aims to recover flared gas from oil fields to power electricity-generation plants.
The $10bn investment also includes the launch of a seawater treatment plant that will allow seawater to be used for oil production rather than relying on fresh water supplies, as well as the development of 1GW of solar power for the Basrah region with assistance from Saudi company Acwa Power.
“In one month, the concrete steps will begin on the ground, including infrastructure construction,” Iraqi oil official Bassem Khdeir told Agence France-Presse, adding that “in three years, the projects will bear fruit”.
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By GlobalDataTotalEnergies CEO Patrick Pouyanné described Monday’s signing in Baghdad as a “historic day”. Iraqi Oil Minister Hayan Abdel-Ghani co-signed the document.
The deal includes plans to increase the oil production capacity at Basra’s Ratawi field to 120,000 barrels per day (bpd) in two years and then to 210,000bpd within four years, according to Monday’s press briefing.
Poyanné told reporters that he hopes “that this will be a strong signal to other investors to come to Iraq”.
Iraq’s oil production has declined in recent months to just over 4.6 million barrels per day, a reduction of about 150,000bpd from January. The Opec member nonetheless remains one of the world’s largest producers.
Exxon Mobil, Shell and BP have made the decision to reduce operations in Iraq in recent years.
