One Year On, Total's Iraq Deal Awaits Liftoff

One year after TotalEnergies signed a $27 billion energy megadeal with Iraq — a project seen as potentially transformational for the country’s upstream fortunes — work has yet to begin. Wrangling over outstanding contract details, including the government’s stake, and a deepening political crisis have prevented the French major from launching what Oil Minister Ihsan Ismael has described as the biggest investment by a Western company in Iraq. Already the timelines are slipping, jeopardizing the Opec country’s plan to phase out gas flaring, while also impairing the positive signals the project appeared to send to foreign investors. Since Total inked the agreement in Baghdad on Sep. 5 last year, dates for its expected “activation” have come and gone, with the ministry unable to get the necessary approvals. This is hardly surprising given the political turmoil in Iraq, whose top court ruled in May that the current caretaker administration does not have the authority to take big decisions, and with powerful political factions likely to resist granting generous concessions to Total. The oil minister has pushed hard for it, meeting Total CEO Patrick Pouyanne in Paris last month and saying afterwards that progress had been made on implementing the four contracts that comprised the deal. Industry sources say the terms of the gas capture, water injection and 1,000 megawatt solar power plant have been agreed, but not the stake allocated to the Iraqi National Oil Co. (INOC). Ismael has said it would be 40%, which seems at odds with Total's plan to bring in other international oil companies (IOCs). The key oilfield component of the contract is also a sticking point. Total declined to comment.