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Iraq Agrees To Hold 30% In TotalEnergies' $27 Billion Iraqi Project

The Iraqi government has agreed to have 30% in a major $27-billion project to be developed by supermajor TotalEnergies in Iraq, down from the 40% stake Baghdad had wanted previously, industry sources told Reuters on Tuesday.

In September 2021, 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 (GW) photovoltaic power plant in the southern Iraqi region of Basra. TotalEnergies signed the agreements with the Iraqi Ministries for oil and electricity, and the country's National Investment Commission.

The French supermajor proposes to invest in installations to recover gas that is being flared on three oil fields and, as such, supply gas to 1.5 GW of power generation capacity in a 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.

The initial investment in the project is estimated at around $10 billion, TotalEnergies said back in 2021.

However, the project has seen setbacks due to the turbulent Iraqi domestic politics and Baghdad's initial insistence that Iraq holds 40% of the project.

The high stake Iraq wanted was one of the key sticking points toward structuring the deal.

Now it looks like a deal has been reached, with Iraq agreeing to take a 30% stake in the project after meetings in Baghdad in recent days, one industry source told Reuters.

A senior official with Iraq's oil ministry told Reuters, "The deal should be activated within days."  

Three weeks ago, TotalEnergies CEO Patrick Pouyanné said at the firm's climate investor meeting, referring to the Iraqi project, "We have many discussions: we have expressed our views, we are waiting for the answer."

"So that's where we are, and I hope we'll find a common ground. I worked on it in the last month. But again, we need to have this political answer," Pouyanné added.

Commenting on the potential agreement, TotalEnergies' top executive also said, "Iraq is not the easiest place to invest."  

By Charles Kennedy for Oilprice.com

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