French giant TotalEnergies SE on Sunday signed a US$27 billion contract to invest in oil, gas and solar production in Iraq, as the country faces an acute energy crisis.
The announcement of the deal, supposedly in part to reduce Iraq’s reliance on fossil fuels, came as Iraqi Minister of Oil Ihsan Abdul-Jabbar Ismail signed the contract at a ceremony in Baghdad with TotalEnergies chief executive officer Patrick Pouyanne.
TotalEnergies has not directly confirmed the value or duration of the contract, which was signed after months of negotiations and several visits by Pouyanne.
Photo: AFP / HO / Iraqi Prime Minister’s Press Office
The French major plans initially to invest US$10 billion in infrastructure, the proceeds of which would for allow a second round of investments of US$17 billion, the officials said.
“This is the largest investment in Iraq by a Western company,” Ismail said. “Implementing these projects is the challenge we face now.”
“Happy to be in Basra where I visited gas and oil fields,” Pouyanne wrote on Twitter in January. “Reducing flaring and increasing gas production is a priority for Iraq as well as for Total. Let’s work together!”
Iraq has immense reserves of oil and gas, but despite being the No. 2 producer in OPEC, it is experiencing an acute energy crisis and chronic blackouts that fuel social discontent.
Officials justify the lack of investment and the dilapidated state of its energy network by citing falling oil prices, which represent more than 90 percent of state revenue.
The country is highly dependent on neighboring Iran, which supplies a third of its gas and electricity needs.
However, Baghdad owes Tehran US$6 billion for energy already supplied.
The contract inked on Sunday with TotalEnergies would cover four energy projects, an Iraqi oil ministry source said ahead of the signing ceremony.
One of these aims to pipe seawater from the Gulf to southern Iraqi oilfields. Water is used to extract oil from subterranean deposits.
Another is intended to increase production from the Artawi oilfield near the southern port of Basra from 85,000 barrels per day to 210,000 barrels per day.
A third project would involve the construction of a complex to exploit production from the sector’s gas fields.
Rather than flaring or burning off the excess, the plan is to recover it for use in electricity generation.
The premier’s office said this would “reduce gas imports.”
The fourth project would see the installation of a solar farm in Artawi.
The Iraqi source said that the solar panels should produce “1,000 megawatts” of electricity, the equivalent of the energy produced by a nuclear reactor.
“Iraq will not pay anything,” the source added.
Electricity produced by solar power “costs 45 percent less than that produced by traditional power stations,” the Iraqi government said.
TotalEnergies has had a presence in Iraq since the 1920s.
In January, Ismail said the relationship with the French firm was “developing rapidly.”
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