The multibillion-dollar deal was signed in September 2021 but has kept hitting roadblocks due to disputes over the terms.
Under the agreement, TotalEnergies will develop four oil, gas, and renewables projects with an initial investment of $10bn in Southern Iraq.
In a statement, Iraq’s cabinet said it agreed to proceed with a lower stake in the project “due to the importance of resolving the issue and proceeding with the signing of related agreements.”
Citing sources, the news agency said authorities in Baghdad agreed to lower the shares in the project from 40% to 30% as TotalEnergies wanted a majority stake and it was a key point of disagreement.
Now, the government backed Basrah Oil (BOC) will partner with the French energy giant instead of Iraq’s National Oil Company (INOC).
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INOC’s involvement is also believed to have been one of the roadblocks in the deal.
“The deal should be activated within days,” a senior Iraqi oil ministry official was quoted by the news agency as saying.
The 25-year project involves building a natural gas gathering network to supply nearby power plants by expanding the Ratawi field.
TotalEnergies will also develop a sizable solar power plant in the Basra region, and build a seawater treatment plant to increase oil production through water injection.
According to people with the the knowledge of the development, QatarEnergy will also participate in the consortium and own a stake in the project.
The revival of this project forms part of Iraq’s efforts to reverse the exodus of oil giants from the country.