According to reporting from various media outlets, the Iraqi government just entered into an agreement in principle with French energy giant Total to develop four major projects. While three of these projects are related to oil and gas, one of them involves setting up 1GW of PV generation capacity. The agreement was signed by the representatives of both sides on March 29.
The Iraqi government and Total began holding talks on various technical and commercial projects in October last year. Both sides then signed an MOU in January this year. This, in turn, led to the agreement in principle that was made at the end of this March. Foreign news agencies reported that an official contract for the implementation of one or more of the four projects could be signed this July, though discussions are still ongoing. Collectively, the four projects are estimated to be worth around US$7 billion.
Iraqi news agencies said that Total CEO Patrick Pouyanné came to the country in March and jointly signed the agreement in principle with Iraqi Oil Minister Ihsan Abdul Jabbar. Although the Iraqi Council of Ministers has yet to give the final approval for the projects, Jabbar told Reuters that the “economic model” and general conditions of the project contracts have been established. Other than that, no additional details about the deal have been revealed.
Iraq’s energy strategy is now shifting toward renewable energies with solar PV as the core component. According to some news and industry analyses, Iraq is now expanding renewable generation because it wants to reduce its dependence on gas and electricity imports. While Iraq is one of the world’s top oil producers, it actually purchases substantial amounts of gas and electricity from Iran. S&P Global said that one of the reasons has to do with OPEC’s quota for the amount of domestic oil used for power generation. Even though the US has been enforcing trade sanctions on Iran, Iraq has been granted temporary waivers to continue its energy trade with Iran.
This February, Bloomberg reported that the Iraqi Oil Minister announced the national target of installing 10GW of PV generation capacity by 2030. Many recent studies from IEA and other international organizations also assert that Iraq has enormous potential for the development of solar projects due to its favorable climate and pressing energy demand.
Even though most of the four projects are related to oil and gas, this deal reflects Total’s ambition of transforming itself into a broader energy company and eventually achieving carbon neutrality. Other recent actions taken by the company as part of its energy transition process include changing its official name from Total SE to “TotalEnergies” and leaving industry lobby group American Petroleum Institute over conflicting views on tackling climate change.
Total also plans to develop more solar projects in other countries. As for the Middle East, Total is currently collaborating with Japanese conglomerate Marubeni on an 800MW project in Qatar.