The French oil giant TotalEnergies signed a deal worth $27 billion with the Iraqi government to develop oil, gas, and solar projects in the country as it is facing a major energy crisis. The agreement aims to decrease power shortages in the country as capacity is not meeting energy demand.
It is also supposed to reduce its reliance on fossil fuels as it targets to generate 20-25% or about 10-12GW of its energy from renewable resources by 2030.
The initial investment of Total will be worth $10 billion, as announced by the CEO Patrick Pouyanne during the signing ceremony in Baghdad on September 5th. The second round of investment is planned to be $17 billion, supported by the proceeds from the first one.
“This is the biggest investment by a western company in Iraq,” according to Iraq’s oil minister Ihsan Abdul Jaber. “Setting up these projects is the challenge we face now,” he added.
Oil, Gas And Solar Projects
The projects agreed upon are four – the first one investing in oil and gas, is extracting oil from subterranean deposits, the other is intended to increase production from the Artawi oilfield near the southern port of Basra from 85,000 barrels per day to 210,000 bpd. The third project will exploit production from the sector’s gas fields.
The deal will also include investing in solar energy – or building a 1,000MW solar photovoltaic power plant. This is part of the country’s efforts to increase its power generation capacity and reduce electricity blackouts. They became widespread across the country during the hot summer months as sometimes peak demand reaches 23.5GW but Iraq’s installed capacity is just 15GW – significantly lower.
Due to the blackouts, Iraq’s economy loses as much as $40 billion a year as quite a lot of areas from the country have access to just a few hours of electricity a day. The four projects will be positioned in areas with the highest rates of electricity shortages and blackouts.