TotalEnergies and Iraq sign $27 billion deal for projects in Iraq

Iraq and French energy company TotalEnergies have signed a long-delayed $27 billion (588.9 billion Kč) deal aimed at increasing oil production and electricity generation capacity in Iraq. The agreement covers four oil, gas and renewables projects, Reuters reported today.

The deal was signed at a ceremony today by TotalEnergies CEO Patrick Pouyanne and Iraqi Oil Minister Hayan Abdul Ghani. Pouyanne called today a historic day and added that the project would get underway in the summer. Investment is expected to total $10 billion over the next four years.

The deal was initially signed in 2021, but faced delays due to disputes among Iraqi politicians over the agreed terms. It was finally concluded in April, when Iraq agreed to take a smaller stake in the project than it had originally sought, at 30 percent. TotalEnergies holds a 45 percent stake, while QatarEnergy holds the remaining 25 percent.

The project aims to improve electricity supplies, including by capturing gas flared at three oil fields. The gas will be used to supply power plants, helping Iraq reduce the cost of imports. The project also includes a wastewater treatment plant that will allow seawater to be used in oil production instead of freshwater, which is scarce in the country. TotalEnergies will also build a solar power plant with a capacity of one gigawatt.

The deal also includes increasing production capacity at an oil field in Basra to 120.000 barrels per day within two years and 210.000 barrels per day within four years, Pouyanne added.

Iraq hopes the project will attract new foreign investment to its energy sector, where investment has stalled in recent years. Exxon Mobil, Shell and BP have scaled back their activities in the country in recent years, contributing to stagnant production.

Iraq's oil production capacity has hovered around five million barrels per day in recent years. At one point, the country hoped to match Saudi Arabia, the world's largest producer. Saudi Arabia's output can reach up to 12 million barrels per day, more than a tenth of global demand.