TotalEnergies, Iraq to Move Ahead on $10 Billion Energy Plan

(Bloomberg) -- TotalEnergies SE and the Iraqi government reached a deal to move ahead on an investment plan worth about $10 billion to boost oil, gas and power production.

The accord, which comes after more than a year of difficult talks between the two parties following a change of government, is good news for the nation which has been struggling to attract foreign investment. It’s been hobbled by years of conflict, terrorism, and insecurity, leaving it subject to electricity blackouts.

TotalEnergies “welcomes the continuity of the voice of the State of Iraq” on the deal, citing it as “a strong and positive signal for foreign investment in the country,” the French company said Wednesday in a statement.

Iraq’s state-owned Basrah Oil Company will take a 30% stake in the so-called Gas Growth Integrated Project, TotalEnergies said, confirming an announcement made by Iraqi authorities Tuesday evening. TotalEnergies has also invited QatarEnergy to take a 25% stake in the project, while the French energy giant will hold a 45% interest. 

The project mainly aims to recover flared gas on three oil fields in order to supply power plants, and to build a seawater treatment plant to provide water injection for pressure maintenance to increase regional oil production, TotalEnergies said Wednesday. The deal was first announced in September 2021.

Making better use of its own gas could help Iraq reduce its dependence on imports of the fuel from Iran — on which it relies for power generation. And using seawater to boost pressure in oil wells will help preserve Iraq’s main rivers for other uses as reserves are strained by global warming.

The French company will also build a 1-gigawatt solar power plant to supply the Basra regional grid, and will invite Saudi utility Acwa Power Co. to join the project.

(Updates with TotalEnergies comment, details on Iraqi backdrop from second paragraph.)

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