by Aref Mohammed, Rowena Edwards and Dmitry Zhdannikov
BASRA/LONDON, Feb 14 (Reuters) – A $27 billion investment project signed in September between oil group TotalEnergies and Iraq has stalled due to disputes over contract terms and could be scrapped by the new Iraqi government, according to several sources.
TotalEnergies and the Iraqi Ministry of Petroleum signed an agreement in September 2021 for four projects in natural gas, solar energy and seawater reprocessing in the Basra region.
The ministry did not, however, secure agreement from all relevant departments on the financial terms of the contract, three sources from the Ministry of Petroleum and Petroleum Industry familiar with the matter told Reuters, and the deal has since stood. blocked.
Following legislative elections in Iraq, it must now be approved by a new government which will not take office until the end of March at the earliest.
Iraq’s oil ministry told Reuters it expected the deal to be finalized after that date.
TotalEnergies said finalization of the deal is progressing but added: “The agreements remain subject to conditions to be met and waived by both parties.”
The terms of the agreement, which have not been made public, have raised concerns among Iraqi politicians and, according to sources familiar with the negotiations, are unprecedented for Iraq.
A group of Shia parliamentarians wrote a letter, a copy of which was seen by Reuters, to the Oil Ministry in January demanding details and asking why the deal was signed without competition or transparency.
Parliament could force the Ministry of Petroleum to review or cancel this agreement.
WAITING FOR $10 BILLION
Under the terms of the project, TotalEnergies plans an initial investment of $10 billion to fund its four projects through sales of oil from the Rataoui field, one of four projects included in the deal, the sources said.
TotalEnergies is expected to receive 40% of Rataoui’s oil sales, Iraqi oil sources involved in the negotiations told Reuters.
According to two of these sources, the French oil group refused a partnership with the National Oil Company (INOC), Iraq’s national oil company, which is also delaying the finalization of the agreement.
In addition to Rataoui, the agreement covers the construction of a solar power plant and a natural gas production station as well as a project to inject seawater into oil fields in order to improve production.
The latter has also suffered delays, the Iraqi Ministry of Oil having decided in August that the builders would finance the project themselves, contrary to an earlier decision. According to the sources, the ministry is still seeking funding. (Report Rowena Edwards and Dmitry Zhdannikov in London, writing by Baghdad, Aref Mohammed in Basra; French version Valentine Baldassari, edited by Jean-Michel Bélot)