The government of Iraq and TotalEnergies earlier today signed a long-awaited deal worth $27 billion that should see Iraq’s oil production grow and boost its reliance on domestic gas for power generation.
The deal also involves the development of low-carbon energy in Iraq, Reuters reported.
The deal dates back to 2021 when TotalEnergies signed multi-energy agreements in Iraq for the construction of a new gas network and treatment units, the construction of a large-scale seawater treatment unit, and the construction of a 1-gigawatt photovoltaic power plant in the southern Iraqi region of Basra.
The French company signed agreements with the Iraqi Ministries for oil and electricity and the country's National Investment Commission.
Part of the proposal was the construction of installations to recover associated gas that is being flared on three oil fields and, as such, supply gas to 1.5 GW of power generation capacity in the first phase, growing to 3 GW in a second phase, and also develop 1 GWac of solar electricity generation capacity to supply the Basra regional grid.
Iraq is currently one of the biggest gas-flaring oil producers globally.
The initial amount to be invested in the megadeal was $10 billion, to be distributed over 25 years but the finalization of the deal was delayed by disputes in Iraq’s government about the terms of the agreement.
Eventually, earlier this year, the authorities in Baghdad agreed to a lower stake of 30% in the projects, down from an initially proposed 40%, clearing the way to the deal’s finalization.
Per the final terms of the deal that the two sides signed today, TotalEnergies will hold 45% in the ventures, and QatarEnergy will hold the remainder of 25%. A Saudi company, ACWA Power has been invited to take part in the solar plant construction project for Basra.
By Irina Slav for Oilprice.com
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