French energy group TotalEnergies has signed contracts worth $27 billion for the production and exploitation of gas, oil and solar energy in Iraq. The company will make an initial investment of $10 billion, chief executive Patrick Pouyanné said at the contract signing in Baghdad.
The contract with TotalEnergies covers four projects over 25 years, according to a source close to the deal. One aims to transport and inject seawater from the Gulf to oilfields, where it can be used to extract oil.
A second project concerns the extraction and exploitation of gas, while the third will aim to increase crude output at one oilfield from 85,000 to 210,000 barrels of oil per day, according to a statement by Iraq’s prime minister Mustafa Al-Kadhimi.
The fourth project, constructing a solar-based power plant, is the second major solar electricity deal Iraq has signed in the past week as it attempts to harness renewable energy. The other deal was with Chinese state-owned Power China. The Iraq government has signed an agreement with Power Construction Corp of China (Power China) to build solar power plants in Iraq with a total designed capacity of 2,000 MW. By the completion of its first phase, the project will help generate 750 MW of electricity.
The French group has also said it would spend more than $2bn this year on electricity and clean energy, seeking 10 per cent returns on the investments.
REGlobal’s Views: In recent years, Iraq has been trying to expand its renewables sector as it seeks to exploit the huge natural resource of solar energy it has, as well as align itself with the goals of the Paris Accord. TotalEnergies has also been vocal about its shift towards renewable energy production. The company recently renamed itself TotalEnergies from Total to symbolise its diversification into cleaner fuels. Its announcement in Iraq demonstrates how TotalEnergies can leverage its unique position in the Middle East, a region where the lowest-cost hydrocarbons are produced, to gain access to large-scale renewable projects.