TotalEnergies and Iraq sign a 10 billion dollar contract for a megaproject

Iraq on Monday signed agreements with TotalEnergies for a ten billion dollar megaproject aimed in particular at exploiting gas flared on southern oil fields and producing solar energy, to compensate for the shortcomings of an electricity network. failing. After the tensions and long negotiations that accompanied this megaproject unveiled in 2021, the CEO of TotalEnergies Patrick Pouyanné and the Iraqi Minister of Petroleum Hayan Abdel-Ghani initialed the agreement during a ceremony organized at the Ministry of Petroleum in Baghdad. "Today we are committed with Total and all the partners towards a serious and fruitful cooperation, to begin the implementation of these contracts on the ground", welcomed the Iraqi minister, during a speech preceding the signature of the four projects.

The announcement comes at a time when Iraq, extremely rich in hydrocarbons, is trying to attract foreign investors to modernize its infrastructure, ravaged by decades of conflict, poor governance and endemic corruption. Some of the investments planned by the TotalEnergies megaproject will contribute to modernizing a deliquescent electricity sector: on a daily basis, the 42 million Iraqis live with load shedding that can last up to 10 hours a day, particularly intolerable in summer when temperatures reach around 50 degrees.

"Things are in order, the partnership is consolidated: TotalEnergies keeps 45% of the project, the Basrah Oil Company 30% and QatarEnergy joins us at 25%," Patrick Pouyanné told AFP on Monday. During a speech, he hailed a "historic day": "TotalEnergies was born in Iraq in 1924, almost a century ago, so it is very symbolic for me (...) to be here today to maintain and continue this history".

Asked by AFP, the Deputy Minister of Oil in charge of extraction, Bassem Khdeir, assured that "the concrete steps on the ground: the construction of infrastructure, studies", will begin "in a month". But it will take three years for the projects to “bear fruit”, he said. A first project aims to recover flared gas from three oil fields in order to supply gas to the country's power stations. As old as the oil industry, this extremely polluting practice consists of burning the gas escaping during the extraction of crude oil. And Iraq is the second country in the world to use this process as much, just behind Russia, according to the World Bank.

A second project aims to develop a giant 1 GW solar power plant to supply the electricity grid in the Basra region (south). A third concerns the increase in production from the Artawi oil field (south) to 210,000 barrels/day. A final component concerns the construction of a seawater treatment plant to supply the water needed for the oil fields and contribute to the supply of drinking water to Basra.

This project will eventually provide five million barrels of water per day, according to figures released Monday during the ceremony in Baghdad. "Today's agreements launch the work (...), on the ground we will mobilize the teams this summer", assured Patrick Pouyanné to AFP. He expects to deliver “the first tranche” of the solar plant “within two years”. But the work of the Megaproject should be completed in 2027-2028, he continued. “We will have delivered both the water, the reduction in gas flaring, the oil field in production and the entire solar plant,” said Patrick Pouyanné.

In Iraq, the power stations are ultra-dependent on the gas supplied by the influential Iranian neighbor, which regularly cuts its supply, aggravating a little more the daily load shedding. The authorities are therefore seeking to diversify their energy sources. In particular, they aim to gradually eliminate gas flaring by 2030 with the aim of “achieving self-sufficiency” by exploiting this gas which will then supply its power stations, assures Bassem Khdeir.