French giant TotalEnergies is set to kick start promised multi-billion dollar oil, gas and renewables investments in Iraq by finalising key contracts with state-owned Basrah Oil Company.
Basim Mohammed, Iraq’s deputy oil minister for upstream affairs, said the two players “are now in the process of finalising some contractual procedures and documents necessary to activate the contract.”
“Meetings continue with TotalEnergies to avoid any delay and the contract will be activated in the second half of this year to start operations,” Mohammed was quoted saying by Reuters.
TotalEnergies last month reached agreement with the Iraqi goverment on a multibillion-dollar investment programme and is poised to pick up a 45% stake in the country’s Gas Growth Integrated Project (GGIP).
Under the outlined agreement, QatarEnergies will step in with a 25% stake, while state-owned Basrah Oil Company will pick up a 30% stake in the Iraqi project.
The deal was initially signed in 2021 for TotalEnergies to build oil, gas and renewables projects in Iraq in the southern part of the country over 25 years, but was delayed amid disputes between Iraqi politicians over terms.
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However, TotalEnergies has confirmed that “all the terms of the development and production contract signed in 2021” and noted that the two entities have “jointly defined the necessary conditions and mutual insurances to move forward with the GGIP”.
$10 billion investment
Under the wide-ranging agreement of 2021, TotalEnergies and its partners will invest $10 billion in projects that will include recovery of flared gas on three oilfields in order to supply gas to power generation plants and building a seawater treatment plant in order to provide water injection for pressure maintenance to increase regional oil production, the French company said.
In addition, the company will develop a 1-gigawatt solar power plant to supply electricity to the Basrah regional grid.
“In agreement with Iraqi authorities, TotalEnergies will invite the Saudi company ACWA Power to join this solar project,” the French company has stated.
In 2021, the deal between TotalEnergies and the Iraq government was touted to be worth $27 billion once subsequent investment phases are taken into account, but the accuracy of such estimates could not be ascertained by Upstream.
One source said that while TotalEnergies and its partners have confirmed $10 billion worth of investments, more clarity on the capex or further investments is likely to emerge in the coming months.