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The Iraqi Oil Ministry has denied that the $27-billion deal with France’s TotalEnergies has stalled, following media reports to that effect.
Citing sources from the ministry, Reuters reported earlier today that the deal between Iraq and TotalEnergies had stalled because of disputes about the terms and risks associated with the deal.
In its statement in response to the report, the oil ministry said it was astonished at the “inaccurate information” included in it.
The French supermajor signed the deal with the Iraqi government in September last year to develop four large-scale energy projects in southern Iraq.
One of the projects will involve injecting seawater into oil fields for enhanced oil recovery. Another would be a $2-billion gas processing plant for the gas from five big southern oil fields. The contract also includes another enhanced oil recovery project for the Ratawi oil field that should boost the field’s output from 85,000 bpd to 210,000 bpd, and a solar farm.
According to the Reuters report from this week, the terms of the massive deals, which were not made public, caused concern among some Iraqi politicians. The report quoted unnamed sources as saying they were unprecedented for the country.
The concern led a group of Shi’ite members of parliament to write to the oil ministry last month and ask why the contract was signed without a tender and without transparency. Reuters reported that it had seen a copy of the letter.
Among the terms that have emerged since is a stipulation that the initial $10-billion investment in the projects would come from royalties due TotalEnergies from sales of oil produced at the Ratawi oil field. These royalties amount to 40 percent of the total revenues from Ratawi, according to the Reuters sources, which is much higher than the usual 10-15-percent royalty rate in traditional technical service contracts.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.