October 08, 2021
Baghdad has finalized a $27 billion investment deal with France’s Total with the goal of reducing its reliance on Iran for natural gas and electricity supplies.
If the four projects in the deal go forward without any political or security disruptions, this would be Iraq’s largest foreign investment deal aimed at developing the energy sector.
Iraq is dependent on Iran for more than 30 percent of its power generation, while Iran itself faces serious shortages.
Iraqi Oil Minister Ihsan Abdul Jabbar said September 5 that the first phase would include the French group’s $3 billion investment to inject seawater into oilfields to enhance crude recovery.
Total, he said, will also provide $2 billion to build a processing plant for gas produced at the southern fields of West Qurna 2, Majnoon, Artawi, Tuba and Luhais.
Jabbar said it is expected to produce 300 million cubic feet of gas per day and double that after the second phase of development.
The oil minister said that the gas produced from Total’s project in the south would help Iraq cut its gas imports from Iran, with the domestically produced gas much cheaper than Iranian gas.
“The cost of the gas imported from Iran is around $8 per million Btu, and the gas produced from Total’s project would be $1.50 per million Btu cheaper,” Jabbar said.
Total will help boost output from the Artawi oilfield to 210,000 barrels per day of oil (bpd) from 85,000 bpd now, an Oil Ministry statement said.
Total had a $5 billion deal with Iran in 2016 for developing gasfields in the Persian Gulf but had to cancel when the United States withdrew from the 2015 nuclear agreement and re-imposed sanctions on Tehran. Total will now be shifting its Middle Eastern involvement from Iran to Iraq.
The Iraqi cabinet, which is largely made up of technocrats, has approved the deal with Total, but it will have to prove its resilience over time with Iran’s influence in parliament, especially if the current prime minister leaves office before Total fully launches the projects.
