The government of Iraqi and TotalEnergies SE are close to finalizing an accord that will trigger billions of dollars of investments aimed at boosting oil and gas production and reducing electricity outages in the Middle-Eastern nation, people familiar with the matter said.
Under the agreement, which may be announced as soon as Sunday, the French energy company will invest in the large Ratawi oil field in the southern province of Basra and bring expertise in seawater injection to the region’s oil wells to maintain their production, said the people, who asked not to be identified because the information isn’t public yet.
TotalEnergies will also help Iraq to capture natural gas associated with several oil fields in the region. That fuel, which is currently burnt in the open air, could be used to feed power plants, the people said. The company will also build a very large solar power plant, they said.
The projects may come as a boon for the Iraqi government, which faces elections next month as businesses and households cope with frequent electricity blackouts. Infrastructure investment in the oil-rich nation has been hobbled by years of conflict, terrorism, and insecurity.
Baghdad, which wants to reduce its reliance on gas imports from Iran, gave its approval in July for an initial agreement with TotalEnergies to boost the country’s hydrocarbon output and build a 1,000-megawatt solar plant. The country relies mainly on natural gas to fuel its electricity plants.
The deals would boost the French company’s modest presence in OPEC’s second-biggest producer, furthering its expansion across the Middle East and North Africa after earlier deals in Libya, Qatar, and Abu Dhabi.
TotalEnergies’s quest for low-cost resources isn’t without risks. Its liquefied natural gas plant in war-torn Yemen has been idled since 2015, and the construction of an LNG facility in Mozambique is on hold for at least a year as the government seeks to contain terrorist attacks in the area.
© 2021 Bloomberg L.P.