TotalEnergies has confirmed that it will make an initial investment of $10 billion in three Iraqi oil fields and develop a solar energy plant to supply the Basrah regional grid in the south of the country, as part of a $25 billion deal with Iraq's government and QatarEnergy.
Reports emerged on Tuesday that the French energy giant had struck a deal with the Iraqi government to work on the $27 billion energy project, with the state taking a 30% stake.
The Iraqi government originally wanted a 40% stake in the project, which ended up stalling due to a dispute over the terms of the deal.
The $27 billion Gas Growth Integrated Project (GGIP) agreed on in September 2021 was created to develop Iraq’s natural resources and improve the country’s electricity supply.
In a statement issued on Wednesday, TotalEnergies confirmed that CEO Patrick Pouyanné had met with Iraqi Prime Minister Al-Sudani four times to agree on the conditions of the deal.
“The Iraqi Government and TotalEnergies have agreed on a 30% stake for the Basrah Oil Company (BOC) in the GGIP. Furthermore, in agreement with the Iraqi Government, TotalEnergies has invited QatarEnergy to take a 25% stake in the GGIP,” the statement said.
Therefore, TotalEnergies will have a 45% share in the project. The Iraqi government, through its southern subsidiary BOC, will have a 30% stake and QatarEnergy will have the remaining 25%, subject to regulatory approvals.
TotalEnergies and its partners will invest around $10 billion to recover flared gas on three oil fields in southern Iraq to help power-generation plants.
The funds, which will be invested over the next decade, will also go toward building a seawater treatment plant to provide water to increase regional oil production.
TotalEnergies will also develop a one-gigawatt solar power plant to supply electricity to the Basrah regional grid and will invite Saudi company ACWA Power to join the project.
“TotalEnergies welcomes the continuity of the voice of the State of Iraq on this Development & Production Contract, which is a strong and positive signal for foreign investment in the country,” the statement continued.
Saad Sherida Al-Kaabi, Qatar's energy minister as well as president and CEO of QatarEnergy, said, “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.
"I would like to express our appreciation to the Government of Iraq for their valuable support to reach this point, and for the trust they have placed in QatarEnergy as a reliable partner.”
Al-Monitor has contacted the ACWA, Iraqi Oil Ministry and TotalEnergies for further comment on the project.
Iraq is OPEC’s second-largest producer, pumping out an average of 3.3. million barrels per day (bpd). The government hopes that the GGIP will help the country produce higher amounts in the future after output has stagnated in recent years after BP, ExxonMobil and Shell have all scaled down their operations there.
On Sunday, OPEC+, the 23-member group which includes Iraq, Kuwait, Russia, Saudi Arabia and the United Arab Emirates, said that it would cut oil production by an additional 1.16 million barrels a day in a surprise decision that was condemned by the United States. As part of the announcement, Iraq pledged to cut output by 211,000 bpd.