WorldA $ 27 billion mega-contract with TotalEnergies

A $ 27 billion mega-contract with TotalEnergies


The Iraqi government and the French TotalEnergies signed Sunday in Baghdad a mega-contract intended to generate 27 billion dollars of investment in the oil, gas and solar production of the country, facing an acute energy crisis. This agreement has a total value of “27 billion dollars” (nearly 23 billion euros), indicated the Iraqi Minister of Oil Ihssan Ismaïl, after having initialed the agreement with the CEO of TotalEnergies, Patrick Pouyanné.

The French major plans to invest initially $ 10 billion in infrastructure, the proceeds of which will then allow a second round of investments of 17 billion, explained the two officials. Solicited, the group did not deliver either the details or the duration of this agreement, which took place at the end of several months of negotiations which saw Patrick Pouyanné travel to Iraq on several occasions.

The “biggest investment of a western company in Iraq”

“This is the biggest investment by a Western company in Iraq,” said Mr. Ismail. “Happy to be in Basra where I visited gas and oil fields,” Pouyanné tweeted in January. “Reducing flaring and increasing gas production are a priority for Iraq as well as for Total. Let’s work together ! “

The first of the four approved projects aims to bring seawater from the Gulf to the oil fields in the south. Water, a scarce commodity, is needed to extract oil buried in basements. And the deeper you have to extract, when the hydrocarbons close to the surface are already being exploited, the more water you need to desalinate. Another project will increase production at the Artawi oil field in southern Iraq from 85,000 barrels / day to 210,000 b / d.

A third provides for the construction of a complex that will exploit gas from the sector’s fields. In particular, rather than “flaring” (burning) the excess gas from these fields, it is about recovering it for the purposes of electricity production. This will, according to the Prime Minister’s services, “reduce gas imports”. Finally, the fourth project will install solar panels in Artawi, near Basra (south). Ultimately, this site should reach a capacity of 1,000 megawatts, the equivalent of a nuclear reactor, according to a source at the Ministry of Petroleum, who adds: “Iraq will pay nothing”.

“The idea is to maximize gas production”

Electric energy produced by solar has a “lower cost of 45% compared to the cost of traditional power plants”, welcomed the Iraqi government. The petroleum minister explained in February that Total had formed a high-level technical team to install a gas plant in Artawi. “The idea is to maximize gas production,” he said. Iraq has immense hydrocarbon reserves. It is the second country in the Organization of the Petroleum Exporting Countries (OPEC), and black gold accounts for more than 90% of its revenues.

But he is facing an acute energy crisis and experiences incessant power cuts, which fuel social discontent. The country even experienced a blackout of almost a day in early July, as temperatures approached 50 degrees. In question: the lack of investment and the dilapidated state of the network, which the country’s leaders are trying to explain by the fall in oil prices.

Iraq is thus ultra-dependent on its Iranian neighbor, which supplies it with a third of its gas and electricity needs. Costly dependency: Baghdad owes Tehran six billion dollars for its energy supply. As for the former Total, one of the five world “supermajors”, it has just renamed itself TotalEnergies to symbolize its diversification into cleaner energies. The group is still largely focused on oil and gas, while showing its intention to devote 20% of its growth investments this year to electricity and renewable energies.

It indicates that it has been present in Iraq since the 1920s, in the exploration and production of hydrocarbons, with today minority stakes in the oil production field of Halfaya (Missan, south) and in the exploration block of Sarsang (northern Iraqi Kurdistan). It also markets products (lubricants) and services.



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