With a whopping $27 billion investment, TotalEnergies is making waves in Iraq's energy sector. While the country is famed for its oil reserves, the French energy giant has chosen to steer clear of new oil exploration. Instead, they're focusing on solar energy and optimizing oil and gas production from existing fields.
In a recent announcement, TotalEnergies revealed plans to put $10 billion into various projects. A significant portion will be directed towards revitalizing flared gas from three fields, transforming it into energy for local power plants. This initiative will help reduce wasteful gas emission as well as the squandering of natural gas.
Another project involves the injection of seawater into oil fields, an approach designed to boost oil production and conserve precious fresh water. The third project aims to construct a solar power plant in Basra, Iraq, to bolster the regional electricity grid.
Patrick Pouyanné, CEO of TotalEnergies, commented on the developments, "These agreements symbolize our return to Iraq, where our company was born in 1924. Our aim is to achieve this through a sustainable strategy. We'll optimally utilize the nation's resources to provide electricity and assist Iraq in building a more sustainable future."
Earlier this year, Total changed its name to TotalEnergies to signify its commitment to renewable energy. It also left the American Petroleum Institute, a powerful oil lobby group, in January due to its stance on climate change.
Despite this shift towards clean energy, the investment in Iraq does not mark a full departure from oil. Prime Minister Mustafa al-Kadhimi stated that Total aims to expand oil production from a single field from 85,000 barrels a day to 210,000 barrels a day.
Over the past 25 years, Total has committed over $27 billion to capital investments and operational costs for its projects in Iraq.
The digital transformation of the energy sector extends beyond oil-producing countries, as TotalEnergies aims to support the energy transition in oil-producing nations by leveraging a mix of gas and solar power to meet growing electricity demands.
"These projects herald TotalEnergies' goal to drive the energy transition in oil-producing countries by combining gas and solar production to meet increasing electricity demands," Pouyanné explained. "Furthermore, it underlines how TotalEnergies can effectively utilize its unique position in the Middle East, where the costs of hydrocarbon production are at their lowest, to secure opportunities in the renewable energy sector."
The Covid-19 pandemic took a devastating toll on Iraq's economy, with its dependence on oil putting the country at a significant disadvantage. Oil revenues account for 90% of Iraq's state revenue, and the pandemic led to a 11% dip in the nation's GDP. Unemployment rates have escalated and social unrest has intensified as a result.
In a recent op-ed published in The Guardian, Iraq's Finance Minister Ali Allawi and Fatih Birol, Executive Director of the International Energy Agency, urged the world to reduce coal, oil, and gas production. They emphasized the need to support nation's that rely on fossil fuel production to avoid disrupting global energy markets.
"When oil revenues begin to decline before fossil fuel-producing countries successfully diversify, vital resources are lost, and poverty rates rise," Allawi and Birol warned.
