In Iraq and Algeria, TotalEnergies signs major deals

French energy giant TotalEnergies has signed major deals with Algeria and Iraq in the past two days.

Iraq’s Ministry of Oil and TotalEnergies signed a long-delayed $27 billion deal aimed at developing Iraq’s energy sector. The deal includes the Gas Growth Integrated Project, which aims to improve Iraq’s electricity supply by recovering gas flares from oil fields and using them to supply power plants. 

TotalEnergies also said it will develop a 1-gigawatt solar plant in the southern city of Basra and invited Saudi Arabia's ACWA Power to participate. The gas project further includes plans for a plant that will use seawater in the oil production process as opposed to water from rivers and marshes. TotalEnergies will also help boost oil production capacity at the Ratawi field in Basra, Reuters reported.

A spokesperson for TotalEnergies confirmed to Al-Monitor that the deal was signed in Baghdad on Monday.

TotalEnergies also signed several deals with Algeria’s state oil company SONATRACH aimed at increasing cooperation between the two on Sunday in Algiers. They specifically agreed to the following, according to a press release from TotalEnergies:

• Increasing gas production at the Tin Fouye Tabankort II and Tabankort Sud fields in southern Algeria by upgrading facilities and drilling new wells. The two expect production to reach 100,000 barrels of oil equivalent (boe) by 2026, compared to 60,000 boe last year.
• Extending SONATRACH’s deliveries of 2 million tons of liquified natural gas (LNG) per year to TotalEnergies’ port near Marseilles to 2024.
• Agreeing to cooperate on renewable energy projects in Algeria. They specifically mentioned solarizing oil and gas exploration sites and studying the potential of low-carbon hydrogen exports.

Iraq and TotalEnergies first agreed on the deal in 2021, but the signing was delayed due to disagreements on the terms. In April, the two agreed that Iraq would take a 30% stake in the Gas Growth Integrated Project, TotalEnergies a 45% stake and QatarEnergy a 25% stake.

The deals between TotalEnergies and SONATRACH are part of an existing agreement worth $740 million, Agence France-Presse reported.

Why it matters: Iraq has chronic electricity shortages due in part to damage from the 1991 Gulf War and looting following the 2003 US invasion. Public electricity only works for part of the day, prompting Iraqis to rely on noisy, fuel-powered generators for hours a day.

The Iraqi government has been working to improve the power issues recently. Iraq signed electricity interconnection deals with Jordan and Saudi Arabia last year.

There have been protests in Basra in recent years against the lack of electricity. The temperatures in the city are often well above 40 C (100 F) in the summer, like in other parts of the country.

Iraq also suffers from water shortages and desertification.

For its part, Algeria is seeking to boost its energy exports to Europe following the Russian invasion of Ukraine as the continent seeks to reduce its dependence on Russian gas.

Know more: Companies from China play a significant role in Iraq’s burgeoning solar sector, Sardar Aziz reported for Al-Monitor in June.