Iraq’s oil ministry has confirmed it is having “some problems” finalising the terms of a multi-billion dollar energy deal agreed with TotalEnergies, but said it is committed to “moving forward” with the agreement.
In 2021 TotalEnergies agreed to spend $27bn of capital and operating expenditure across four oil, gas and solar projects over a 25-year period, touted by Baghdad at the time as the country’s single-largest investment by a western company. The deal has since stalled, partly due to internal political disputes but also disagreement over the size of the state’s share in the projects.
“There are some problems over shareholding structure but time has been given to resume a dialogue to reach a solution,” an oil ministry spokesperson told Argus. “The ‘time’ period may extend to a few months,” he added.
A separate source with knowledge of the discussions confirmed that the shareholding structure is one of the main sticking points. But both sides appear committed to overcoming the impasse. “The Iraqi government and the oil ministry support moving forward with the agreement. We have no problems with TotalEnergies, our relationship is good and growing,” the ministry spokesperson said.
The ministry’s comments on the state of negotiations follow a story published by the Iraq Oil Report, an independent US-based news outlet with offices in Baghdad, which said TotalEnergies had begun to withdraw staff from Iraq following a difficult meeting in Paris between the company’s chief executive Patrick Pouyanne and Iraqi prime minister Mohammed Shia al-Sudani. During the meeting, the Iraqi side insisted on taking a 40pc share in the projects rather than the 25-30pc envisioned by TotalEnergies, according to the report.
Besides the wrangling over the shareholding structure, reaching agreement on the terms of the deal has also been complicated by disputes among Iraq’s political factions, which resulted in a full year of deadlock after parliamentary elections in October 2021 during which a caretaker government was in charge. Iraqi lawmakers finally approved a new government in October last year, with al-Sudani as prime minister.
Al-Sudani travelled to Paris for an official state visit on 27 January, during which France and Iraq signed a set of agreements in sectors including energy, power and finance. The French government reiterated its commitment to major infrastructure and energy projects in Iraq, namely the renovation of the electricity network and an electrical interconnection with Jordan, as well as the $27bn deal with TotalEnergies, according to a statement from the French presidency.
Source: argusmedia
