Signed in 2021, the agreement between the Iraqi government and the French giant has been slow to materialize due to tensions.
By Le Figaro with AFP
Posted update
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After strong tensions and long negotiations, Iraq and the French giant TotalEnergies have reached an agreement to implement a $10 billion investment announced in 2021, intended in particular to improve a dilapidated electricity network responsible for ubiquitous power cuts. In February, the Iraqi Ministry of Petroleum indicated that the implementation of the contract was still coming up against persistent disagreements, in particular on the level of Iraq’s participation in the project planned for a period of 25 years.
The Iraqi Prime Minister had visited Paris, and the CEO of TotalEnergies, Patrick Pouyanné, was in Baghdad this weekend at the invitation of the Prime Minister, according to the French major. Eventually Baghdad, which wanted 40% of the project, agreed to reduce its stake to 30%, according to a report published Tuesday evening by the Iraqi cabinet, “given the importance of solving the problem».
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In the wake of Wednesday morning, TotalEnergies announced an agreement with the government “on a 30% stake of the Basrah Oil Company (BOC)in this project called GGIP (Gas Growth Integrated Project). The consortium will thus be composed of TotalEnergies (45%), Basrah Oil Company (30%) and QatarEnergy (25%).
«Thanks to discussions in recent months, in particular on four occasions between Prime Minister Al-Soudani and CEO Patrick Pouyanné, the Iraqi government and TotalEnergies have confirmed all the terms of the contract signed in 2021 and jointly defined the conditions and mutual insurance necessary to move forward on the GGIP project (Gas Growth Integrated Project)“, specified the French group. Total Energy “welcomes the continuity of the word of the State of Iraq on this contract, which sends a strong and positive signal for foreign investment in the country».
On March 21, Patrick Pouyanné had sent a warning publicly expressing his doubts about the outcome of this project, whose terms Baghdad wanted to re-examine after a change of government: “We invest for 20 years, so if the contract has to change after two years, it means that we are not going,he had warned, during a presentation of his climate report.
«We know the security situation, geopolitics… I think we are bold enough to face it, but what is fundamental for me is respect for the contract (…) I will not lead the company into a such a project if we have to renegotiate all the terms (…) I hope we will find common ground. (…) but we need a political response“, he added, shortly after receiving his invitation to Baghdad.
Electricity and oil
Dilapidated and a collateral victim of corruption, the Iraqi electricity network is suffering. Load shedding can last up to 12 hours a day in this country, which is nevertheless rich in hydrocarbons. TotalEnergies, present in Iraq since the 1920s, will invest with its partners in four projects, both in hydrocarbons and to produce electricity.
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A project aims torecover flared gas from three oil fields to supply gas to power plants“. Another will be to develop a giant 1 GW solar power plant “intended to supply the electricity network of the Bassorah region. In agreement with the Iraqi authorities, TotalEnergies has invited the Saudi company ACWA Power to participate in this solar project».
A project aims to increase the production of the Artawi oil field, in the south of the country, from 85,000 barrels/day to 210,000 b/d. And a last must allow to “build a seawater treatment plant to maintain pressure from the oil fields and increase regional production“. QatarEnergy has for its partwelcomed this opportunity to participate in such an important project for Iraq and its people».
When signing the contract in 2021, the Iraqi government claimed that it was the “largest investment by a Western company” in the country. He had at the time reported a contract for a total of 27 billion euros of investment in the country’s oil, gas and solar production, but the investments amount well, at this stage, to 10 billion confirmed Wednesday.