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French energy giant Total signed an oil and natural gas contract worth about 27 billion U.S. dollars with Iraq when other large oil companies were seeking to withdraw from Iraq’s energy sector.
French energy giant Total signed a large-scale contract worth 27 billion U.S. dollars with Iraq to develop oil fields, natural gas and an important water conservancy project. Officials said on Monday that the project will be the key to maintaining crude oil production in the oil-rich country.
According to a statement from the Ministry of Petroleum, the deals were signed on Sunday and Prime Minister Mustafa Kadimi attended.
Total and the Ministry signed a contract to develop the Latawi Oil Field in southern Iraq, a natural gas processing center that obtains natural gas from five southern oil fields, and a processing center that processes Gulf seawater and injects it into oil reservoirs to maintain oil production levels. Urgently needed items.
The fourth project was signed with the Ministry of Electric Power to build a 1,000 MW solar power plant.
This is the most profitable and ambitious agreement that an oil giant has signed in Iraq over the years. At the same time, other international oil companies have taken steps to withdraw from the oil industry in Iraq.
Total did not immediately issue a statement.
Iraq urgently needs to develop local natural gas resources to meet electricity demand, especially during the peak summer period. The country is heavily dependent on Iran’s imports of natural gas and electricity, and imports have been irregular recently due to unpaid payments and high domestic demand in Iran.
In an interview in June, Petroleum Minister Ihsan Abdul-Jabbar Ismail stated that his goal is to increase Iraq’s natural gas production capacity by 3 billion cubic feet (85 million cubic meters) by 2025. The development of natural gas processing centers will bring Iraq closer to that goal. Iraq currently imports 2 billion cubic feet (56.6 million cubic meters) to meet domestic demand.
The project requires the construction of a natural gas complex capable of separating and processing natural gas related to oil extracted from the Ratawi, West Qurna 2, Majnoon, Tuba and Luhais fields. Iraq currently lacks a method to capture this gas, and it is burned in the atmosphere. Experts complain that Iraq is not effectively capturing this gas and is wasting millions of dollars in revenue. After processing, the gas can be transported to power plants to meet household electricity needs.
Iraq has stated that it plans to eliminate natural gas combustion in the next two to three years. The World Bank estimates that Iraq burns approximately 16 billion cubic meters (565 billion cubic feet) of natural gas every day.
However, industry officials and technical experts within the Ministry of Petroleum said that for the well-being of the Iraqi oil industry, what is more urgent is the seawater development part of the package deal.
Oil is the main industry in Iraq, accounting for 90% of the country’s revenue. In order to maintain current production rates and meet future goals, water is reinjected into the oil field to maintain well pressure.
Officials said that the signing of the agreement was promoted by Prime Minister Mustafa Kadimi before next month’s national elections. Although the ministries and technical bureaucrats have reservations about this, they doubt that Total is taking the seawater problem seriously.
“The Ministry of Petroleum and [state-owned] The Basra Petroleum Company suspects that Total is serious about the seawater project. They think they will promote the oil field and natural gas hub projects and postpone the rest,” said an industry official who understands contract negotiations. An official at the Bank of China expressed the same concerns. They declined to be named because they do not have the right to report to the news. Communicating the situation.
Industry and ministries officials warned that due to shortages, sufficient supply of reinjection water could not be guaranteed, and there were no alternatives.
The contract with Total reflects another multi-project deal that has been negotiating with US oil giant ExxonMobil for years. But after years of arduous negotiations, the deal ended in failure.
The Total deal also took place at a time when other oil companies were planning to exit Iraq. Exxon Mobil announced this year that it will sell its stake in the West Qurna 1 oil field. The Minister of Petroleum also stated that BP will divest the development of the country’s largest Rumaila oil field.
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