Key elements of TotalEnergies’ four-pronged $27 billion project that will define Iraq’s oil and gas industry for years to come are 80 to 95 percent complete, according to a report from Iraq’s oil ministry. Rehabilitation work on the first central processing facility (expected to increase capacity from 60,000 barrels per day to 120,000 barrels per day) is 80% complete, while the Artawi-PS1 export pipeline project is 95% complete. Overall, a senior source working closely with the ministry exclusively revealed Oil Price Network Weekend: “It [TotalEnergies] is doing what it promised, ahead of schedule on multiple fronts, because it has been allowed to proceed with these projects with little to no usual government interference. He added: “If the rest of the work continues as it is, then we will be on track to achieve a huge increase in oil production in a relatively short period of time.” “
Indeed, the Common Seawater Supply Project (CSSP), a key element of TotalEnergies’ four-part plan, has long promised that Iraq would eventually be able to realize its full hydrocarbon potential and become one of the world’s top three oil producers – perhaps second only to the United States. As I fully analyze in my latest book on the new order in the global oil market, CSSP involves obtaining and treating seawater from the Persian Gulf and then transporting it via pipelines to oil production facilities to maintain reservoir pressure. This will optimize field life and production. The basic plan for the CSSP is that it will initially be used to supply about 6 million barrels per day of water to at least five oil fields south of Basra and one oil field in Maysan Province, and then expanded to other oil fields. Iraq’s long-important Kirkuk and Rumaila fields (the former began production in the 1920s and the latter in the 1950s, and both account for about 80% of the country’s cumulative oil production) require large and sustained water injections. The former’s reservoir pressure dropped significantly after producing only about 5% of its oil in place (OIP), while Rumaila produced more than 25% of its oil in place before requiring water injection, according to the International Energy Agency (IEA). This is because Rumaila’s main reservoir is connected to a very large natural aquifer, which helps push oil out of the reservoir.
According to the IEA, in order to meet and maintain Iraq’s future crude oil production targets over any meaningful period, Iraq’s total water injection needs will be equivalent to about 2% of the average combined flow of the Tigris and Euphrates rivers, or 6% of the total flow during the off-season. While these levels of water withdrawal appear manageable, these water sources must also continue to meet the requirements of other end-use sectors, including the large agricultural sector. Saudi Aramco’s Qurayyah seawater plant expansion project provides a wealth of information on potential timelines for completion of the CSSP. The 2 million barrels per day expansion of the existing facility took nearly four years, from the award of the front-end engineering, procurement and design contract in May 2005 to the first start of water connections in early 2009.
Progress with CSSP has been less straightforward, to put it mildly. As US companies ExxonMobil and China National Petroleum Corporation (CNPC) battled for control of the critical infrastructure project, the project was delayed for more than a decade before the US company finally pulled out amid growing concerns about a lack of transparency in all areas of the project outside its direct control. These were mentioned in a report from that period by the respected independent NGO Transparency International (TI). “Corruption Perception Index”. The publication describes Iraq as: “One of the worst countries in terms of corruption and governance indicators, with corruption risks exacerbated by a lack of public administration experience, a weak capacity to absorb large amounts of aid funding, sectarian issues and a lack of political will for anti-corruption efforts.” Transparency International added: “Large-scale corruption, procurement fraud, money laundering, oil smuggling and widespread bureaucratic bribery have led to the country ranking high in international corruption rankings “Political interference in anti-corruption agencies and the politicization of corruption, weak civil society, lack of security, lack of resources and incomplete legal provisions have severely limited the government’s ability to effectively curb the spread of corruption,” the report concluded. has made little progress, leaving the door open for TotalEnergies to secure the contract as part of a broader $27 billion four-pronged deal.
Given the progress made on the deal, there is huge scope for oil production growth, which was made clear as early as 2013 in the Integrated National Energy Strategy (INES). This is a detailed analysis of three realistic forward oil production profiles for Iraq and what each would involve, which is also detailed in my latest book. Specifically, INES’s best-case scenario is for crude oil production capacity to increase to 13 million barrels per day (by 2017), peak near that level by 2023, and eventually gradually decline to around 10 million barrels per day over the long term thereafter. The medium-term production scenario is for Iraq to reach 9 million barrels per day (by 2020), and the worst-case INES scenario is for Iraq to reach 6 million barrels per day (by 2020). Compare these figures to Iraq’s current production of 4-4.2 million barrels per day.
The gas component of TotalEnergies’ four-pronged deal is also seen as critical to its long-term future as it directly affects its ability to end its reliance on Iranian gas imports and grid power. This provides Iran with long-term leverage over Iraq, which it uses to continue exporting its own oil around the world under the name Iraqi oil, as I analyze in detail in my latest book. Tehran has also been able to use this influence to establish extensive military proxies in its neighbors and expand the influence of the Shiite power crescent. Iran plans to build a “land bridge” across Iraq to the Mediterranean coast, which Tehran would then use to increase shipments of weapons to its armed proxies for use against Israel.
The gas component of the TotalEnergies mega-deal involves gathering and refining associated natural gas currently being flared in five fields in southern Iraq: West Qurna 2, Majnoon, Tuba, Luhais and Artawi. Comments from the Iraqi Oil Ministry last year highlighted that plants involved in the process are expected to produce 300 million cubic feet of natural gas per day (mcf/d), with output set to double after a second phase of development. Former Iraqi Oil Minister Ihsan Abdul Jabbar also said last year that natural gas produced by the second Total Energies project in the south would help Iraq reduce its natural gas imports from Iran. In addition, successfully capturing associated gas rather than flaring it would also allow Iraq to revive the also long-stalled Nebraska petrochemical project, an $11 billion project that could be completed within five years and is expected to generate profits for Iraq of up to $100 billion over the initial 35-year contract period.
Looking ahead, TotalEnergies’ four-pronged $27 billion energy project seems likely to complete its original goals around 2028, as long as the French energy giant continues to do so. A key element of this is that various forces that continue to resist the Iraqi establishment seek to muscle in on the vast sums of money involved in the project in order to enrich themselves at the expense of the greater good of the country. A powerful example is TotalEnergies’ categorical refusal to participate in a major deal for the rebuilt Iraqi National Oil Company (INOC). INOC, widely regarded in the West as one of the most corrupt organizations in any sector in the world, proposed some form of involvement in the four projects but was quickly rejected by the French energy giant “because the company’s legal status was unclear”. Subsequently, in October 2022, the Iraqi Federal Supreme Court declared the decision to restructure the Iraqi National Oil Company invalid on the grounds that many of the founding provisions of the Iraqi National Oil Company violated the constitution.
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