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February 15, 2022

Iraq’s $27bn deal with TotalEnergies stalled over financial terms disputes

TotalEnergies agreed to invest in four oil, gas, and renewables projects in the southern Basra region.

Iraq’s $27bn deal with French energy company TotalEnergies has been stalled due to disputes over the financial terms, and possible risks of being cancelled by the new government, reported Reuters.

The agreement, which was signed in September 2021, was expected to reverse the trend of several oil majors exiting from Iraq.

The deal involves the Ministry of Electricity, and three contracts with the Iraqi Ministry of Oil.

The agreement requires TotalEnergies to invest in four oil, gas, and renewables projects in the southern Basra region, over a period of 25 years.

At the time, the Iraq Oil Ministry did not agree on the financial details of the deal with the government departments.

Since then, the deal had been held up in disputes, reported the news agency, citing three Iraqi oil ministry and industry sources familiar with the negotiations.

The Iraqi Oil Ministry is negotiating TotalEnergies’s financing as part of the deal.

The deal is due to receive approval from a new Iraqi Cabinet, which includes new Oil and Finance Ministers, who are not expected to be in place until the end of March 2022.

Denying issues in implementing the deal with the French firm, the Iraq Oil Ministry said that the deal “needs time.”

An Iraqi Oil Ministry spokesperson was cited by Reuters as saying that the deal between TotalEnergies and Iraq would be completed sometime from March onwards.

TotalEnergies was cited by Reuters as saying: “The agreements remain subject to conditions to be met and lifted by both sides.”

The parliament, however, could force the Oil Ministry to scrap the deal or review it, reported Reuters.

The government has repeatedly cut oil production targets as a result of foreign oil firms’ exits from the country, citing poor returns from revenue sharing agreements.

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