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Iraq signs $27bn deal with TotalEnergies

TotalEnergies Iraq signing ceremony Reuters/Thaier Al-Sudani
TotalEnergies' Patrick Pouyanne and Iraqi deputy prime minister Hayan Abdul Ghani Al Swad sign the deal in Baghdad
  • Contract marks largest single foreign investment in Iraq
  • Baghdad intends to almost double Iraq’s oil production
  • Partners to build desalination and solar power plants

Iraq has signed a $27 billion deal with French major TotalEnergies to increase oil production and build renewable energy facilities.

The long-delayed agreement represents the biggest single foreign investment in Iraq, Opec’s second largest crude producer.

“I hope that this will be a strong signal to other investors to come to Iraq,” said TotalEnergies chairman and CEO Patrick Pouyanne.

The development and production contract was originally agreed in 2021, with TotalEnergies set to build four oil, gas and renewables projects in southern Iraq.

The initial investment was to be $10 billion over 25 years, but the deal was delayed after disputes among Iraqi politicians.

The row was resolved in April this year when the Iraqi government agreed to take a reduced 30 percent stake in the project.

TotalEnergies has a 45 percent share and QatarEnergy holds the remaining 25 percent.

Baghdad wants to nearly double Iraq’s oil production to 8 million barrels per day by 2028, from 4.4 million bpd last year.

To do so, the country needs more water injection capacity to maintain reservoir pressures at its plentiful southern fields, which account for about 90 percent of its crude production. 

Under the deal, TotalEnergies will build a seawater desalination plant and recover flared gas from three oil fields.

This gas would then be used to supply power plants, helping to reduce Iraq’s electricity import bill.

TotalEnergies will also build a 1gw solar power plant to supply electricity to the southern city of Basra and has invited Saudi Arabia’s Acwa Power to join this project. 

A spokesman for Iraq’s Ministry of Oil, Assem Jihad, said in a statement that the deal represents “an important addition to support the national economy”.