Iraq moves toward easing its energy crisis with $27B TotalEnergies deal, but challenges remain

BAGHDAD (AP) — A multibillion-dollar agreement signed with France's TotalEnergies could help resolve Iraq's longstanding electricity crisis, attract international investors and reduce its reliance on gas imports from neighboring Iran, a point of tension with Washington.

The $27 billion agreement signed in Baghdad on Monday after years of negotiation marks the largest foreign investment in Iraq's history. It could even help combat climate change by reducing oil flares, and relieve some of the stress on Iraq's dwindling waterways through a new desalination plant.

But that's only if the parties implementing the agreement can overcome the endemic corruption and political instability that has undermined Iraq's oil sector for more than two decades.

The Gas Growth Integrated Project focuses on bolstering the country’s oil-rich but underdeveloped Basra province. TotalEnergies would take on a 45% stake in the Basra Oil Company, with Iraq holding 30% and Qatar's state-owned petroleum company taking the other 25%.

It would recover natural gas from three oil fields and use it to generate electricity. Because Iraq lacks the necessary infrastructure, that gas is currently being burned off into the atmosphere. The World Bank estimates Iraq flares around 16 billion cubic meters of gas per day.

The project also includes the construction of a seawater treatment plant that would relieve the pressure on Iraq's water resources, and a solar power plant to be built with Saudi Arabia's ACWA Power that would supply the local grid.

Iraq is an OPEC member with some of the world's largest oil reserves. But its electricity grid has suffered from decades of mismanagement and damage from various conflicts. Power outages are common, especially in the scorching summer months, forcing many Iraqis to rely on diesel generators or suffer through...