Iraq’s $27 billion deal with TotalEnergies stalled over disputes over financial terms

Iraq’s $27 billion deal with French energy firm TotalEnergies has stalled due to disputes over financial terms and possible risks of cancellation by the new government, reports Reuters.

The deal, which was signed in September 2021, was expected to reverse the trend of several oil majors leaving Iraq.

The agreement involves the Ministry of Electricity and three contracts with the Iraqi Ministry of Petroleum.

The agreement requires TotalEnergies to invest in four oil, gas and renewable energy projects in the southern region of Basra, over a 25-year period.

At the time, the Iraqi Oil Ministry disagreed on the financial details of the deal with government departments.

Since then, the deal has been delayed by disputes, the news agency reported, citing three sources in Iraq’s oil and industry ministry familiar with the negotiations.

The Iraqi Ministry of Petroleum is negotiating financing for TotalEnergies as part of the deal.

The deal must receive the approval of a new Iraqi cabinet, which includes the new oil and finance ministers, who are not expected to be in place until the end of March 2022.

Denying problems implementing the deal with the French company, Iraq’s oil ministry said the deal “needs time”.

A spokesman for Iraq’s Oil Ministry was quoted by Reuters as saying that the deal between TotalEnergies and Iraq would be concluded from March.

TotalEnergies was quoted by Reuters as saying: “The agreements remain subject to conditions to be met and waived by both parties.”

Parliament, however, could force the oil ministry to cancel the deal or revise it, Reuters reported.

The government has repeatedly cut oil production targets following the exits of foreign oil companies from the country, citing poor returns from revenue-sharing agreements.

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