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French oil and gas multinational TotalEnergies (NYSE:TTE) has finally reached an agreement with the government of Iraq to start a long-delayed $27 billion energy project in two weeks, Iraq's oil minister Hayan Abdel-Ghani said on Wednesday.
The two parties first struck the deal back in 2021 that would see Total build four oil, gas, and renewables projects in southern Iraq over 25 years with an initial investment of $10 billion. Unfortunately, the giant project was shelved amid disputes and squabbling between Iraqi politicians over the terms of the deal.
However, last month Iraq agreed to a smaller 30% stake in the project, setting in motion a deal that could lure foreign investment back into the country. After years of instability, Iraq has been enjoying a period of relative stability, increasing the chances of foreign investors returning to the country.
"The government of Iraq confirmed the whole contract, no modification at all ... so that was for me more than good news," Total Chief Executive Patrick Pouyanne has told Reuters.
Last year, widespread fighting broke out between Iraqi Shiite cleric Moqtada al-Sadr’s loyalists and Iraq’s military after the cleric announced that he would withdraw from politics. Military forces fought with al-Sadr’s supporters, with the police responding with tear gas and physical fights with protesters.
The cleric’s decision to quit politics came in the wake of a political crisis that has left the country without a new government, prime minister, or president for months.
The situation in Iraq, which pumps more than 4 million barrels per day (bpd), exacerbated oil supply fears and pushed prices higher. However, the ongoing ceasefire suggests that the country’s oil will continue reaching global markets unhindered.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.