Save for later Print Download Share LinkedIn Twitter Iraq, Opec's second-biggest oil producer, has inked a $10 billion deal with French major TotalEnergies to help it curb frequent power blackouts. Besides helping with the urgent problems in Iraq, the deal could be illuminating for the wider oil industry by serving as a test of Total's global game plan -- many aspects of which are mirrored in the new partnership. The deal would see Total work to boost Iraq's gas-fired generation, build utility-scale solar photovoltaics, boost oil production, reduce gas flaring and, ultimately, help the country rely less on intermittent imports from Iran.Oil-rich Iraq frequently suffers from widespread blackouts as demand for electricity often outstrips supply. This imbalance happens both domestically and through various import routes -- including from neighboring Iran, which has been hampered by payment disputes. Attacks on electricity infrastructure have compounded the challenges. In its latest country report on Iraq, the International Energy Agency (IEA) said power outages in Iraq are "a daily occurrence for most households." The problem naturally worsens during the peak summer months as air conditioning usage spikes amid soaring temperatures.Fighting BlackoutsThe gap between peak demand and peak supply is growing despite capacity additions, the IEA notes, with the mismatch often rising above 10 gigawatts (see graph). Total said last week that Iraq is "experiencing electricity shortages while it faces a sharp increase in demand from the population." If all goes as planned, the deal would eventually increase domestic electricity production capacity by up to 4 GW, including 3 GW of gas-fired capacity and 1 GW of solar photovoltaics.The $10 billion deal Total has struck with Baghdad is designed to help the country fight these power issues on multiple fronts, while potentially drawing up a blueprint for international oil companies to use their low-carbon expertise in oil-rich countries that lack the know-how to transform their energy systems unaided. Under the agreement, Total will construct a new gas gathering network and treatment units to supply local gas-fired power stations. The aim is to recover flared gas from three oil fields -- Iraq ranks second on the World Bank's top flaring countries list behind Russia -- and use it to supply 1.5 GW of gas-fired power capacity under a first-phase development. This could be expanded to 3 GW under a possible second phase. Total will also build 1 GW of utility-scale solar PV capacity to supply the Basrah regional grid. Further, the deal would see Total construct a large-scale seawater treatment unit to increase water injection capabilities, enabling increased oil and gas output without further stressing water supply.Mirror Image of Total's StrategyAs such, the deal is a mirror image of Total's own energy transition game plan, which aims to promote the synergies of natural gas and renewables . CEO Patrick Pouyanne says "this project perfectly illustrates the new sustainable development model of TotalEnergies ... and supports producing countries in their energy transition by combining the production of natural gas and solar energy to meet the growing demand for electricity." Pouyanne adds that Total wants to "leverage its unique position in the Middle East , a region where the lowest-cost hydrocarbons are produced, to gain access to large-scale renewable projects".No Time to LingerLong term, Iraq will need to upgrade its local transmission and distribution electricity grids and overhaul its antiquated high-voltage transmission network. Yet this could take up to 10 years to complete once started. System losses can reach 50%, making them some of the highest in the world, despite Iraq working with Germany's Siemens and the US' GE to strengthen the ailing grids. Increasing imports from regional neighbors including Jordan, Kuwait, Saudi Arabia and Egypt would also help but this would take time.Short-term fixes include building more small oil-fired generation units, but this would increase greenhouse gas emissions and air pollutants. Medium-term fixes include building solar PV units and wind farms, which typically take two to three years to complete, and gas-fired combined cycle power stations, which the IEA predicts would take roughly two to four years to build in Iraq. In its country report, the IEA said "there are a number of pathways available for the future of electricity supply in Iraq but the most affordable, reliable and sustainable path requires cutting network losses by half at least, strengthening regional interconnections, putting captured gas to use in efficient power plants, and increasing the share of renewables in the mix." The Total deal would help tackle some of those tasks, but minimizing system losses would require additional action.