Baghdad settles for 30% TotalEnergies project stake
Iraq has reached an agreement to hold a 30% stake in TotalEnergies’ long-delayed $27bn project in the country, three sources said on Tuesday, reviving a deal Baghdad hopes could lure back foreign investment to a battered country craving stability.
The agreement was signed in 2021 for TotalEnergies to build four oil, gas and renewables projects with an initial investment of $10bn in southern Iraq over 25 years. But it has experienced several setbacks amid disputes among Iraqi politicians over the terms.
Iraq, Opec’s second-largest producer, has for years been plagued by war, corruption and sectarian tension holding back its potential.
Iraq’s demand for a 40% share in the project was a main sticking point because TotalEnergies wants a majority stake.
The agreement to lower the share to 30% was struck after meetings in Baghdad over the past few days, an industry source said.
TotalEnergies did not immediately respond to a request for comment.
“The deal should be activated within days,” a senior Iraqi oil ministry official said.
The project includes the construction of a natural gas gathering network to supply local power stations through the expansion of the Ratawi field, building a large-scale seawater treatment facility to boost output from other fields using water injection and a large solar power plant in the Basra region.
QatarEnergy will also take part in the consortium and will have a share in the project, sources said.
Sources had said in January that QatarEnergy was looking at a stake in the project.
QatarEnergy did not immediately respond to a request for comment.
A big investment by a Gulf state in the project would mark an important win for Iraqi Prime Minister Mohammed al-Sudani, who took office in October 2022 after more than a year of political turmoil, and would be considered a step towards countering Iranian influence.
A revival of the project is vital to Baghdad’s efforts to reverse the exit of oil majors from the country.
ExxonMobil, Shell and BP have all scaled back their operations in Iraq in recent years, contributing to a stagnation in Iraq’s oil production.
Iraq’s oil production capacity has remained at about 5-million barrels a day in recent years. Yet at one time there were hopes of rivalling top producer Saudi Arabia with its output of 12million barrels a day, which is more than a tenth of global demand.