Iraq's $27 billion contract with TotalEnergies is in limbo, and it's possible that the new Iraqi government could cancel the deal. In the past years, Iraq has struggled to draw substantial investment into its energy sector. TotalEnergies agreed to invest in four oil, gas, and renewables projects in southern Basra. Having undergone a parliamentary election, the deal now requires approval by a newly elected Iraqi cabinet. This includes a new oil and finance minister, who will not be in place until at least the end of March.
Local media reports suggest that Shi'ite lawmakers requested details of the deal in January and inquired as to why it had been signed without competition and transparency. The Ratawi field pumps 85,000 barrels of oil per day and could bring TotalEnergies $10 billion as part of the overall deal. A deal between the Iraqi oil ministry and TotalEnergies is being negotiated in which the foreign company receives 40% of the revenue from the oil sales of Ratawi.
That dwarfs the more usual 10-15% that investors would have received from past projects through Iraq’s technical service contracts, which reimbursed foreign companies for capital and production costs and paid a fixed remuneration fee in crude. The Iraqi oil ministry and TotalEnergies are negotiating a deal where the foreign company gets 40% of the revenue from the oil sales of Ratawi. Iraq's oil ministry officials say it should compete with other energy producing countries to attract big investors like TotalEnergies.
TotalEnergies is also concerned about the deal. Sources say that the French company has rejected becoming partners with the National Oil Company of Iraq (INOC). This, in turn, is delaying the signing of the contract. Recent years have seen Iraq's capacity for oil production grow from 3 million to around 5 million barrels per day. Nonetheless, projects like the sea water supply project have been delayed due to a lack of funding and investors' emphasis on environmental, social, and governance criteria.
