The multi-billion dollar contract encompasses four energy projects that are intended to help the country alleviate its electricity crisis.

Iraq and Total sign deal to develop four energy projects

photo_camera AFP/AHMAD AL-RUBAYE - Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail (right) and the head of French energy company TotalEnergies, Patrick Pouyanne (left), sign a contract to invest in oil, gas and solar energy production in Iraq

Iraq has signed a $27 billion contract with French energy group Total Energies to invest in the gas, oil and solar energy sectors in a move that international analysts say was rewarded after French President Emmanuel Macron's recent visit to Baghdad.

Observers say the deal is "the largest investment by a Western company in Iraq", as described by Iraqi oil minister Ihsan Abdul-Jabbar Ismail.

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The Iraqi minister also announced that the company will build four major energy projects in the south of the country. Total Energies CEO Patrick Pouyanne said the project would start with an initial investment of $10 million and said engineering work would begin "immediately".

Iraq currently produces 16,000 megawatts of electricity, a figure far short of the minimum megawatts it would need, or about 24,000 megawatts that would reach 30,000 in the summer. It is also estimated that by 2050 its population could double, which translates into an increase in energy consumption, according to the United Nations. 

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This electricity deficit means that the country witnesses continuous power outages, especially in the summer months when the heat reaches 50 degrees Celsius. According to officials, this is due to a lack of investment and a worn-out grid that keeps oil prices down, even though Iraq has large hydrocarbon reserves and oil accounts for more than 90 per cent of its revenue.

One of the four projects that were agreed upon includes a plan to develop solar energy harnessing. According to the forecast, the project is estimated to provide the production of 1,000 megawatts. In addition to this initiative, three projects are included in the fossil energy sector, whose production has been diminished due to the erosion of infrastructure and the leakage of energy derived from the extraction of oil and gas from the subsoil. 

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In the first instance it would include "the extension of the seawater pipeline, which is important for the maintenance and production of the oil fields, and provides seawater to the oil fields", considered "an essential factor" in the extraction of oil. Another project revolves around the 'investment of gas from fields outside Basra Gas Company, with a total amount of 600 million standard cubic feet per day', according to the company.

Subsequently, the third project would include the development of the Artawi oil field, located in the south of the country, which would help increase crude oil production in the country. In this way, Total will help boost production to 210,000 barrels per day, according to an oil ministry statement reported by Reuters.

This commitment by the French company reduces Iraq's high dependence on Iran for energy resources, as a third of its energy needs are supplied from Tehran. This dependence is costing Iraq dearly, as Baghdad owes Tehran $6 billion for all its energy supplies. 

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For its part, the French group continues to focus on expanding its business in the energy sectors, but has also shown interest in devoting 20 per cent of its investments to electricity this year.

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