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09/06/2021 | News release | Distributed by Public on 09/06/2021 12:16

Iraq signs $27bn energy deal with TotalEnergies: Resend

Adds detail throughout. Original story was published yesterday

TotalEnergies yesterday signed a $27bn agreement with the Iraqi government to invest in four troubled energy projects that the country has struggled to implement for several years.

The firm has committed to an initial investment of around $10bn. The projects include the common seawater supply project (CSSP), which Iraq has been trying to progress for over a decade. TotalEnergies will develop a 7.5mn b/d facility to provide desalinated seawater for injection into oil fields, which will be vital to maintaining and ultimately expanding production at mature fields in southern Iraq. Previously Iraq planned to develop the CSSP in two phases.

TotalEnergies will also boost production at the 85,000 b/d Ratawi oil field in Basrah, lifting capacity by 150pc to a plateau of 210,000 b/d. And it will invest in the construction of a 600mn ft³/d gas processing complex at Ratawi to capture flared gas from southern oil fields, according to Iraq's oil ministry. The facility will produce around 12,000 b/d of condensate and 3,000 t/d of LPG. The captured gas will supply 1.5GW of power generation in the first phase and 3GW in the second phase, TotalEnergies said. This will help eventually reduce Iraq's reliance on gas imports from Iran.

The final part of the deal covers the construction and operation of 1GW solar power plant, which Iraq says will produce electricity at less than 45pc of the cost of its current generation capacity. According to the initial agreement signed by TotalEnergies with Iraq in March, the first 500MW phase is due online in just over a year. The initial engineering and design stage is due to start by the end of the year.

Iraq has been plunged into extended power outages, sparking sporadic protests and the resignation of the minister of electricity in May. The main reason for the crisis is the failure of the country's generation and transmission infrastructure to meet rising demand, making the solar power deal even more important.

Iraq said it envisages a profit of $95bn on the investment over the life of the contract, assuming an oil price of $50/bl. But it could still face delays. The signing ceremony comes ahead of Iraq's parliamentary elections in October, which could bring in a new government in Baghdad.

By Adal Mirza and Rowena Edwards