The deal between Iraq and Total Energies, postponed for years, avoided the risk of collapse, with Baghdad reaching an agreement with the French giant, under which the former will receive a 30 percent stake in the $27 billion oil and gas project, removing one of the last obstacles to starting the implementation of contracts.
The government of Mohammed Shia al-Sudani had stopped the deal with Total Energies, demanding that Iraq’s share be 40 percent of contracts for oil and gas projects, while the percentage in initial contracts was 25 percent.
The initial agreement between the two parties was signed in 2021 and allows Total Energies to build four oil, gas, and renewable energy projects with an initial investment of $10 billion in southern Iraq over 25 years.
Iraqi Oil Minister Hayyan Abdul Ghani said late last month that French oil giant Total Energies and Iraq would soon finalize a long-awaited $27 billion energy deal and that the talks were “at advanced stages.”
On March 21, Total CEO Patrick Pouyanne broke his silence on the fraught negotiations with Iraq, putting the issue as a test of the state’s ability to honor contracts by changing governments and shifting political winds.
Pouyanné said he had held several rounds of discussions with the Baghdad government and was now awaiting a “political decision” from the Iraqi government before moving forward.
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“I’ll tell you the truth – we discussed the contract we signed. Iraq is not the easiest place to invest. We know the risks. We signed the contract in September 2021 with one government. We knew there would be elections after that. It was a test: Will this contract change with the new government?”
The deal has witnessed during the past months a political and economic controversy, which prevented the two parties from taking practical steps to implement the projects, amid fears of financial obstacles that may threaten their implementation, which Iraq relies on to reap profits that may reach $50 billion.
According to the Iraqi ministry, the total return from profits during the contract period (25 years) amounts to $95 billion, calculating the price of a barrel of oil at $50.
Resumption of oil exports
This information revealed by Reuters intersected with another important oil development, which was manifested in the agreement of the Iraqi government with the Kurdistan Region of Iraq to resume exporting Kurdistan oil, after the meeting of Prime Minister Muhammad Shia al-Sudani and the President of the Regional Government Masrour Barzani, where it was confirmed to the direct technical authorities on Tuesday to implement the agreement, according to the Iraqi News Agency.
An official in the Kurdish regional government said the agreement, signed in Baghdad in the presence of Iraqi Prime Minister Mohammed Shia al-Sudani and Kurdistan Region Prime Minister Masrour Barzani, to be implemented “today” (Tuesday).
For his part, Al-Sudani announced the agreement to resume the export of oil in the Kurdistan region, stressing that the direct technical authorities must implement the agreement with Erbil immediately, according to the Iraqi News Agency.
Turkeye shut down a pipeline from northern Iraq to Ceyhan this month after the international arbitration panel said KRG authorities should not export oil from the Mediterranean terminal without Baghdad’s approval.
The resumption will allow more than 400,000 barrels per day of Iraqi oil exports to pass through Turkeye.
In the proceedings, Iraq accused Turkeye of violating the 1973 pipeline agreement by allowing the KRG to export oil without Baghdad’s consent between 2014 and 2018.
The volumes flowing through the pipeline to Turkeye’s Ceyhan port represent only about 0.5 percent of global oil supply, but the shutdown, which forced oil companies operating in the region to halt production or move it to quick-filling storage tanks, last week contributed to pushing up oil prices.
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