Total and Iraq reach $27bn energy project agreement

5 April 2023

The French oil company TotalEnergies has confirmed that it has reached an agreement with the Iraqi government on a delayed $27bn energy project after years of intensive negotiations.

The breakthrough in negotiations has come after the Iraqi government agreed to take a smaller stake in the project.

The Iraqi government has now said it will take a 30 per cent stake in the project. TotalEnergies said in a statement it would own a 45 per cent stake, with QatarEnergy holding the remaining 25 per cent.

The deal was originally signed in 2021 and involves TotalEnergies developing four energy projects with an initial investment of $10bn in southern Iraq over 25 years.

Since 2021, progress on the projects has stalled due to disputes over the terms of the agreement.

One of the key sticking points was Iraq’s demand for a 40 per cent share of the project.

TotalEnergies said the latest deal reached with the Iraqi government “is a strong and positive signal for foreign investment in the country”.

Saad Sherida al-Kaabi, Qatar’s minister of state for energy affairs and president and chief executive of QatarEnergy, said: “We thank TotalEnergies for inviting us to partner with them and we thank the esteemed Iraqi government for welcoming us to be part of this partnership.

“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 progress it to fruition.”

Four megaprojects

The $27bn deal between TotalEnergies, QatarEnergy and Iraq includes a facility to treat associated natural gas from five southern oil fields.

These are:

  • West Qurna 2
  • Majnoon
  • Artawi (also known as Ratawi)
  • Tuba
  • Luhais

Iraq’s Oil Ministry has previously said that this gas deal is the most important of the four projects that Total will execute under the agreement.

The facility is expected to process 300 million cubic feet of gas a day (cf/d) and double that after a second phase of development.

Large volumes of gas are currently flared from these fields, causing significant environmental damage.

Collecting and processing this gas will generate increased hydrocarbons revenues and reduce environmental damage. The planned central gas complex will be located in Artawi.

The gas processing project will supply Iraq’s national gas network to generate electric power, as well as to increase the production of gas products, including liquefied petroleum gas and condensate.

The other three projects include:

  • The $4bn common seawater supply project (CSSP)
  • A project to develop the Artawi field
  • The establishment of a 1GW solar energy project for the electricity ministry

In 2021, Abdul Jabbar said all four projects had their “final memoranda signed” and the technical and commercial work scope agreed upon.

He also said that Total and the Oil Ministry had been in talks regarding these projects since October 2020.

He said technical, commercial, economic and financial matters were discussed for the four projects during the talks and that Total had committed to pumping in billions of dollars to realise the projects.

The CSSP has seen significant delays since it was first announced in 2011 and has stalled in recent years.

In January 2021, MEED revealed that Iraq’s state-owned Basra Oil Company revived the dormant project, asking contractors to submit commercial bids for the main pipeline package, estimated to be worth about $1.5bn.

The Oil Ministry said that Total agreed to ensure that the CSSP would have the capacity to transport 2.5 million barrels of water a day once the initial phase had been completed.

It said that the project was “one of the most important projects with regard to sustaining production in the oil fields”.

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Wil Crisp
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