Sources: Qatar Energy is in talks to join Total Energies projects in Iraq, by Reuters


© Reuters. The logo of Qatar Energy in a photo from the Reuters archive.

By Hadeel Al Sayegh, Maha El Dahan and Ron Bousso

DUBAI/LONDON (Reuters) – Qatar is in talks to take a stake in a group of energy projects belonging to France’s Total Energy worth $27 billion in Iraq, three sources told Reuters, as Baghdad hopes to stop efforts by Western energy companies to exit the country.

Obtaining a major investment from a Gulf state represents an important win for Iraqi Prime Minister Mohammed al-Sudani, who took office last October after more than a year of political turmoil, and would also be a step towards countering Iranian influence.

One of the sources said Qatar Energy was looking to take a stake of about 30 percent in the project. Energy companies rarely own 100 percent of projects and prefer to enter into partnerships to reduce risks.

And after a wide range of deals that followed the US invasion more than ten years ago, oil companies are seeking to leave Iraq due to the weak return from revenue-sharing agreements.

When Total Energy and Baghdad signed an agreement in 2021 to build four mega projects for solar energy, gas, electricity and water in southern Iraq over a period of 25 years, hopes were high that companies would refrain from leaving the country. Exxon Mobil, Shell and BP have sought to reduce their operations in Iraq over the past few years.

But the project, which aims to boost Iraq’s economy and reduce its dependence on Iranian gas, has yet to get off the ground.

The Total Energies deal with Iraq, which needs an initial investment of $10 billion, followed a visit by French President Emmanuel Macron in September 2021.

Sources close to the deal told Reuters in February 2022 that the terms of the agreement, which have not yet been announced or previously published, raised concerns among Iraqi politicians and were unprecedented for Iraq.

The deal includes the establishment of a collection network to supply local power plants through the expansion of the Ratawi field, the construction of a large-scale seawater treatment facility to boost production from other fields with water injection technology, and the construction of a large solar power plant in Basra.

But there has been little progress since then. Sources told Reuters last year that disagreements over the terms of the deal threatened the project with cancellation.

Qatar Energy and Qatar’s government communications office did not immediately respond to a request for comment on the talks.

Total Energies did not confirm the deal when contacted by Reuters.

A senior Iraqi Oil Ministry official said he was not aware of Qatar Energy’s plans to take a stake in the Total Energies project.

* Sudanese to Paris

A spokesman for the Elysee Palace said that Iraqi Prime Minister Mohamed Shiaa al-Sudani will travel to Paris on Thursday and meet Macron.

One of the sources told Reuters that Sudani would also meet Patrick Pouyanne, chief executive of Total Energies, in an effort to end the crisis.

Two of the sources said that Qatar Energy and Total (EPA:) Energiz are in talks about a stake in the project and that there is great confidence that the deal will happen, although no final agreement has been reached yet.

Arab countries, among them, are seeking to counter Tehran’s influence in Iraq.

Last December, Iraq and France organized a conference in Jordan to show support for Baghdad, which has faced crises such as Islamic State militants, the impact of climate change, corruption and instability since the 2003 US-led invasion.

The conference was attended by Qatar, Saudi Arabia and Iran.

French and Qatari energy companies have close partnerships in the giant Qatari LNG production sector, as well as large energy projects around the world, including projects in Guyana, Namibia and South Africa.

Pouyan told investors after the agreement was announced that Iraq is an essential part of Total Energies’ focus in the Middle East, adding that the agreement is a win-win for both parties and its costs will be paid through oil sales from the Ratawi field.

He also added that Total Energies is looking for partners in projects in which it wants to keep a stake of between 40 and 50 percent.

(Prepared by Mahmoud Salama and Mahmoud Abdel-Gawad for the Arabic Bulletin)

Leave a Comment