Progress on the key elements in TotalEnergies’ US$27 billion four-pronged project that will define Iraq’s oil and gas sector in the years to come ranges from 80% to 95% complete, according to reports from the country’s Oil Ministry. This runs from 80% finished on the rehabilitation work on the first Central Processing Facility — expected to double production capacity from 60,000 to 120,000 barrels per day (bpd) — to 95% finalised on the Artawi-PS1 export pipeline project. Overall, a senior source who works very closely with the Ministry exclusively told OilPrice.com over the weekend: “It [TotalEnergies] is doing exactly what it said it would, ahead of time in several respects, as it has been allowed to get on with the projects with almost none of the usual government interference.” He added: “If the rest of the work continues like this, then we are looking at potentially enormous gains in oil production in a relatively short time.”
Indeed it is, as the key element of TotalEnergies’ four-part plan — the Common Seawater Supply Project (CSSP), has long held out the promise that Iraq could finally deliver on its full hydrocarbons potential and become one of the world’s top three oil producers — second perhaps to the U.S. As analysed in full in my latest book on the new global oil market order, the CSSP involves taking and treating seawater from the Persian Gulf and then transporting it via pipelines to oil production facilities in order to maintain pressure in oil reservoirs, which will optimise the longevity and output of the fields. The basic plan for the CSSP is that it will be used initially to supply around six million bpd of water to at least five southern Basra fields and one in Maysan Province, and then extended for use in further fields. Both the longstanding stalwart Iraqi fields of Kirkuk and Rumaila – the former beginning production in the 1920s and the latter in the 1950s, with both having produced around 80% of the country’s cumulative oil production – require major ongoing water injection. The reservoir pressure at the former dropped significantly after output of only around 5% of the oil in place (OIP), while Rumaila produced more than 25% of its OIP before water injection was required, according to the International Energy Agency (IEA). This was because Rumaila’s main reservoir formation connects to a very large natural aquifer that has helped to push the oil out of the reservoir.
To reach and then sustain Iraq’s future crude oil production targets over any meaningful period, Iraq will have total water injection needs equating to around 2% of the combined average flows of the Tigris and Euphrates rivers or 6% of their combined flow during the low season, according to IEA figures. While withdrawals at these levels might look manageable, these water sources also have to continue to satisfy other end-use sectors, including the enormous agricultural sector. Informative in terms of the potential timeline for the completion of the CSSP is the case of Saudi Aramco’s Qurayyah Seawater Plant Expansion. The 2 million bpd expansion of an existing facility took nearly four years from the awarding of the front-end engineering, procurement and design contract – in May 2005 – to the time that water first began to flow in early 2009.
Progress at the CSSP has been less straightforward, to put it mildly. It was delayed for over a decade, as the U.S.’s ExxonMobil and the China National Petroleum Corporation (CNPC) battled it out for control of the pivotal infrastructure project until the U.S. firm finally withdrew over mounting concerns over the lack of transparency across all areas of the project outside its direct control. These are alluded to in the reports around that time from the highly-respected independent non-governmental organisation Transparency International (TI) in its ‘Corruption Perceptions Index’. The publication described Iraq as being: “Among the worst countries on corruption and governance indicators, with corruption risks exacerbated by lack of experience in the public administration, weak capacity to absorb the influx of aid money, sectarian issues and lack of political will for anti-corruption efforts.” TI added: “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state-building and service delivery.” It concluded: “Political interference in anti-corruption bodies and politicization of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption.” Due to the terms of the contract, CNPC automatically found itself in the driving seat of the CSSP, but also made little progress, leaving the door open for TotalEnergies to secure the contract as part of the wider US$27 billion four-pronged deal.
Given the progress being made across this deal, the scope for oil output gains is huge, and was made plain back in 2013, in the Integrated National Energy Strategy (INES). This analysed in detail three realistic forward oil production profiles for Iraq and what each would involve, as also detailed in my latest book. Specifically, the INES’ best-case scenario was for crude oil production capacity to increase to 13 million bpd (at that point, by 2017), peaking at around that level until 2023, and finally gradually declining to around 10 million bpd for a long-sustained period thereafter. The mid-range production scenario was for Iraq to reach 9 million bpd (at that point, by 2020), and the worst-case INES scenario was for production to reach 6 million bpd (at that point, by 2020). These numbers compare to the current Iraqi production of 4-4.2 million bpd.
The gas component of TotalEnergies’ four-pronged deal can also be regarded as critical to its long-term future, in that it directly impacts its ability to end its dependence on Iran for gas imports and electricity for its power grid. This provided Iran with longstanding leverage over Iraq, which it used to enable it to continue to export its own oil around the world disguised as Iraqi oil, as analysed in full in my latest book. Tehran was also able to use this leverage to allow it to build out extensive military proxies across its neighbour and to expand the influence of the Shia Crescent of Power. This was further leveraged as part of Iran’s plan to build a ‘land bridge’ that would run via Iraq all the way to the Mediterranean coast, which would then be used by Tehran to increase arms shipments to its militant proxies for use against Israel.
The gas part of TotalEnergies’ megadeal involves the collection and refining of associated natural gas that is currently burned off at the five southern Iraq oilfields of West Qurna 2, Majnoon, Tuba, Luhais, and Artawi. Comments from Iraq’s Oil Ministry last year highlighted that the plant involved in this process is expected to produce 300 million cubic feet of gas per day (mcf/d) and double that after a second phase of development. Former Iraqi Oil Minister, Ihsan Abdul Jabbar, also stated last year that the gas produced from this second TotalEnergies project in the south would help Iraq to cut its gas imports from Iran. Moreover, successfully capturing associated gas rather than flaring it will also allow Iraq to revive the also long-stalled US$11-billion Nebras petrochemicals project, which could be completed within five years and would generate estimated profits of up to US$100 billion for Iraq within its 35-year initial contract period.
Looking ahead, there appears to be every chance that TotalEnergies’ US$27 billion four-pronged energy project will be completed around the initial target year of 2028, provided that the French energy giant continues to do what it is doing. One key element of this is continuing to resists any attempts by various elements of the Iraqi establishment to muscle in on the tantalisingly enormous sums of money involved in the project to make themselves richer, at the expense of the greater good of their country. A strong case in point was TotalEnergies’ point-blank refusal to accept any involvement in the megadeal of a re-established Iraqi National Oil Company (INOC). Widely known in the West as one of the most corrupt organisations to operate in any field anywhere in the world ever, INOC’s proposed participation in some form or another in the four projects was quickly vetoed by the French energy giant ‘due to the lack of clarity on the legal status of the company’. Subsequently, in October 2022, Iraq’s Federal Supreme Court invalidated the decision to re-establish the Iraqi National Oil Company on the basis that several of its founding clauses were in breach of the constitution.
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