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The Iraqi government announced on Sunday that French energy group TotalEnergies has signed a $27 billion contract for the production and exploitation of natural gas, oil and solar energy in Iraq.
The company’s chief executive officer Patrick Pouyanné stated in a contract signed in Baghdad when the deal was announced that the company will make an initial investment of US$10 billion.
Agence France-Presse reported that the Minister of Petroleum, Ihsan Abdul Jaber, stated: “This is the largest investment by a Western company in Iraq.” “Establishing these projects is the challenge we are now facing. ”
Iraq has been attracting foreign investors, hoping to increase oil production and natural gas capture, because it is working to alleviate long-term power failures, and severe power outages have exacerbated social unrest.
As OPEC’s second-largest oil producer, more than 90% of Iraq’s revenue comes from crude oil sales, and it was severely hit when the spread of the coronavirus reduced the demand for oil and the price plummeted. According to data from the International Monetary Fund, the country’s GDP has shrunk by 11% in 2020, and poverty has increased amid the deteriorating unemployment rate.
According to a source close to the deal, the contract with TotalEnergies covers four projects for more than 25 years.One designed to transport seawater from the bay and into oil fields, where it can be used to extract oil.
According to a statement by Iraqi Prime Minister Mustafa Kadimi, the second project involves the extraction and exploitation of natural gas, while the third project aims to increase the crude oil production of an oil field from 85,000 barrels per day to 210,000 barrels of oil. .
The fourth project is the construction of a solar power plant, which is the second major solar power agreement signed by Iraq in the past week to use renewable energy. The other deal was reached with China’s state-owned Power China Company.
In recent years, Iraq has been trying to expand its renewable energy sector as it seeks to develop its huge solar natural resources and is consistent with the goals of the Paris Agreement.
The country has also been trying to get rid of its dependence on Iranian natural gas by extracting more natural gas domestically. Iraq currently burns most of the associated gas released from oil production, a process that damages the environment and wastes natural gas.
TotalEnergies has also been vigorously promoting its transition to renewable energy production. The company recently changed its name from Total to TotalEnergies to symbolize its diversification toward cleaner fuels.
This year, it became the first oil major to terminate its membership in the American Petroleum Association, a powerful Washington lobbying group for large oil companies, citing its position on climate change and its support for politicians who oppose the Paris Agreement.
The French group also stated that it will spend more than US$2 billion on electricity and clean energy this year, seeking a return on investment of 10%.
But Pouyanné also made it clear that he believes the company needs Develop the fossil fuel business of TotalEnergies Help generate cash for green investment. The group expects its oil production to remain stable and aims to expand its natural gas business.
TotalEnergy declined to comment further.