Page 21 - MEOG Annual Review 2021

MEOG SEPTEMBER MEOG

Given the struggles Iraq has faced in ramping of course important, but the biggest win is in the
up oil production, this project will be critical to decision of a super-major to invest so heavily in
Baghdad achieving its target of expanding pro- the country’s upstream at a time when fears were
duction capacity to 8mn bpd by 2027 from the growing about further IOC departures.
current 5mn bpd level. In recent years, Royal Dutch Shell has
departed the Majnoon and West Qurna-1 oil-
Low carbon fields, with ExxonMobil currently working to sell
Low carbon and renewable energies form key its remaining share in the latter. Earlier this year,
pillars of Total’s rebranding as TotalEnergies, BP and Lukoil were reported to be considering
and the company emphasised these elements of selling their shares in Rumaila and West Qurna-
the project in its statement accompanying the 2; however, in recent weeks, both companies
announcement. have announced plans that indicate their inten-
The French firm said it would “invest in tion to remain, although in BP’s case indirectly.
installations to recover gas that is being flared Lukoil announced plans in late August to add
on three oil fields and as such supply gas to 1.5 around 80,000 bpd of output, while BP shifted
GW of power generation capacity in a first phase, to indirect involvement in Rumaila through the
growing to 3 GW in a second phase”, adding that new Basra Energy Company Ltd joint venture
it will “also develop 1 GW of solar electricity (JV) with PetroChina and Basra Oil Co. The
generation capacity to supply the Basra regional UK-based firm has been carrying out its own
grid”. rebranding exercise and reducing its exposure
The MoO noted that the solar plant would to oil and gas, but the move allows it to maintain
reduce the cost of generating electricity by its participation, at least in the short term, while
around 45% compared to its existing power raising external financing for efforts to step up
stations. production from the field from 1.4mn bpd to
In a statement on social media, Laurent 2.1mn bpd.
Vivier, TotalEnergies’ SVP for MENA E&P, said: While the MoO is understood to still be re-as-
“Among other benefits, these projects will help sessing the harsh terms of the long-term service
reduce gas flaring, which generates air pollution contracts (LTSCs) with international opera-
and greenhouse gas [GHG] emissions.” tors, by ensuring BP, Lukoil and TotalEnergies’
involvement in the development of key fields,
Turning tide Baghdad appears to have averted what could
For the French company, the deal represents a have been its most damaging crisis, for now at
significant opportunity to increase its footprint least.
in Iraq and develop significant reserves while Meanwhile, the French firm’s deal may yet
providing a long-overdue solution to the issues serve as a blueprint for attracting more foreign
of flaring and gas utilisation alongside a major involvement, sensitive of the pressures these
solar facility. firms face to improve their environmental
From Baghdad’s perspective, these issues are credentials.™

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