Iraq News
Energy

Iraqis welcome energy development contract with French firm

By Faris al-Omran

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Iraqi labourers at the oil refinery of Zubair, southwest of Basra in southern Iraq, on March 3, 2016. [Haidar Mohammed Ali/AFP]

A new Iraqi agreement with the French company TotalEnergies to invest in four mega energy projects in the country's south will help Iraq tackle its electricity shortages and move away from dependence on Iran, analysts said.

The $27 billion contract, signed in Baghdad on September 5 with Iraqi Prime Minister Mustafa Kadhemi present, also will help Iraq develop its domestic capabilities in the areas of oil and gas production.

The French company's investments in infrastructure will amount to $10 billion, followed by a second round of investments valued at $17 billion, Iraqi Oil Minister Ihsan Abdul Jabbar said in a statement.

The 24-year agreement is expected to generate a total return on profits of $95 billion, a calculation based on the $50 per barrel price of oil.

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Iraqi government officials and representatives of French energy company TotalEnergies on September 5 signed an agreement to invest in Iraq's energy fields. [Iraqi Prime Minister's media office]

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A $27-billion contract to invest in oil, gas and solar production in Iraq, signed in Baghdad on September 5, will help the country address its energy crisis. [Iraqi Prime Minister's media office]

Oil expert Hamza al-Jawahiri said the agreement is part of the "Great South Project" and includes contracts for the implementation of four major projects in the electricity, oil and gas sectors.

Foremost among these is a project to develop the Ratawi oil field in Basra to increase its daily production capacity from about 50,000 barrels per day to 200,000.

"The reason for selecting this field is the high concentration of gas associated with the oil extraction process (flare gas)," he said.

He noted that the flare gas will be processed through a second large project that includes building a 600 million sq. ft complex.

To ensure the field's reserves do not decrease, a third project will be implemented to treat sea water and pump it to the field through a network of pipelines with a capacity of five million barrels of water a day, al-Jawahiri said.

This will increase the pressure of the oil flow, he explained.

"The fourth project, which is the most important, includes the construction of a solar power plant with a capacity of 1,000 megawatts and the capability of production up to 3,000 or 4,000 megawatts," he said.

The engineering activity for the projects is scheduled to start by the year's end.

Reduced dependence on Iran

Al-Jawahiri stressed the importance of these projects in covering Iraq's needs for electricity and gas, which is used to generate electric power.

The project also will help Iraq to reduce its energy dependence on Iran.

Per the agreement, the cost of the gas to be produced by TotalEnergies' project in Iraq will amount to about 20% of the cost of the gas Iraq imports from Iran.

It costs about $8 to import one million BTUs, while producing the same amount would cost $1.50.

Al-Jawahiri said the Ratawi gas project is one of several in the works that, when completed, will cover about 90% of Iraq's electricity production needs.

In order to operate its power plants, Iraq imports most of the gas it needs from Iran at prices that are significantly higher than global prices.

The continual interruptions in the supply of Iranian gas reduce the number of electricity supply hours, especially in the summer, he said.

Building a long-term partnership with France is the most positive aspect of the agreement and "will help us cover a large part of the electricity shortages", economist Anas Malik Dohan al-Hassan said.

Al-Hassan said the agreement with TotalEnergies reflects enhanced relations between Iraq and France, and the two countries' efforts to build a long-term partnership, especially in the economic arena.

He called for "benefiting from the Iraqi human capabilities and resources in the implementation of the projects agreed upon with Total".

For its part, he said, Baghdad focused on assuring the projects would provide job and training opportunities for thousands of Iraqis, and would enhance national development efforts.

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