A $27 billion energy agreement between Iraq and the French oil giant TotalEnergies was finally signed on Monday. The pact intends to expand oil output and improve the nation’s ability to create energy through four oil, gas, and renewable energy projects.

The agreement, which was first signed in 2021 but delayed due to disagreements between Iraqi lawmakers over its conditions, was ultimately completed in April when Iraq agreed to accept a 30% interest in the project rather than the 40% it had originally requested.

QatarEnergy owns the remaining 25%, with TotalEnergies owning 45% of the company.

At a ceremony in Baghdad, the deal was signed by TotalEnergies Chairman and CEO Patrick Pouyanne and Iraqi Oil Minister Hayan Abdel-Ghani. Pouyanne referred to the occasion as “historic day.”

He stated that construction on the project would begin this summer and require an expenditure of $10 billion over the following four years.

“This is the starting day, and we’ll deliver the projects in the next four years for the benefit of everybody in Iraq,” he said.

By recovering flared gas from three oilfields and utilising it to fuel power plants, the Gas Growth Integrated Project (GGIP) seeks to increase the nation’s electricity supply while also lowering Iraq’s import costs.

Inviting the Saudi business ACWA Power to join the project, TotalEnergies said that it would also build a 1 GW solar power facility to supply electricity to the Basra regional grid.

“It is the real beginning of investment in renewable energy in Iraq,” Abdel-Ghani said of the solar project.

The drought-stricken Iraq will be able to use seawater instead of the scarce freshwater from rivers and marshes in the water-intensive oil production process thanks to the GGIP, which includes a treatment plant.

Iraq believes the project will bring in new foreign investment for its energy industry, which has not received any since a rush of deals following the U.S. invasion more than ten years ago.

“I hope that this will be a strong signal to other investors to come to Iraq,” Pouyanne said.

In recent years, Exxon Mobil, Shell, and BP have all reduced their operations in Iraq, which has resulted to a decline in oil production.

In recent years, Iraq’s oil production capability has stayed at or near 5 million barrels per day.

Nevertheless, there had formerly been a desire to compete with top producer Saudi Arabia, whose 12 million bpd output represents more than a tenth of the world’s demand.

According to Pouyanne, the recently signed agreement includes plans to increase the oil production capacity at Basra’s Ratawi field to 120,000 barrels per day (bpd) in two years and to 210,000 bpd in four years.

(Adapted from AlArabiya.net)