French group TotalEnergies says it has signed an initial investment contract in Iraq worth 10 billion dollars. The 25-year deal will focus on building infrastructure to exploit oil, gas and solar energy.
TotalEnergies on Monday confirmed in a statement that the company will invest more than 8 billion euros in Iraq over the coming years.
The announcement of the deal, intended in part to reduce Iraq’s reliance on fossil fuels, came after Iraq’s Oil Minister Ihsan Ismail signed the contract at a Baghdad ceremony with TotalEnergies chief Patrick Pouyanné on Sunday.
“This agreement shows we are coming back to Iraq in a big way, to the country where our company was born in 1924,” Pouyanné said.
The Iraqi government estimated the overall value of the contract at 23 billion euros.
That figure is a combination of expenses tied to the investment plus running costs. “We have enough revenue to cover these expenses,” Pouyanné explained during the press conference on Sunday.
Total plans initially to invest 10 billion dollars in infrastructure, the proceeds of which will then allow a second round of investments of 17 billion dollars, officials said.
Oil, gas and solar projects
“This is the largest investment in Iraq by a Western company,” Ismail said. “Implementing these projects is the challenge we face now.”
The contract covers four projects involving oil, gas and solar energy installations.
Seawater is to be piped from the Gulf to southern Iraqi oilfields, then used to extract oil from subterranean deposits.
Another project is intended to boost production from the Artawi oilfield near the southern port of Basra from 85,000 barrels per day to 210,000 bpd.
A third project will see the construction of a complex to exploit production from the sector’s gas fields.
Rather than flaring or burning off the excess gas, the plan is to recover it for use in electricity generation.
The fourth project will see the installation of a solar farm in Artawi.
Iraqi sources said that ultimately, the solar panels should produce 1,000 megawatts of electricity, the equivalent of the energy produced by a nuclear reactor.
The company says it objective is to “provide electricity for the local population by better managing their natural resources”.
Energy management crisis
Iraq has huge natural reserves of oil and gas and is the world’s second exporter among Organization of the Petroleum Exporting Countries (OPEC). Fuel exports account for 90 percent of Baghdad’s revenues.
Despite this, the country continues to face an energy crisis with frequent power cuts, contributing to growing social unrest.
Officials justify the lack of investment and the dilapidated state of its energy network by citing falling oil prices.
France’s former Total, which has renamed itself TotalEnergies to symbolise a diversification into cleaner sources of power, is one of the world’s top five energy companies.
While still focused on oil and gas, the company has indicated that this year it will devote 20 percent of its investments to electricity and renewable energies.