First Phase Of Game-Changing Iraq Project To Start Early Next Year
- TotalEnergies’ $27 billion mega-project in Iraq has entered full execution, with first output expected by early 2026.
- The gas capture initiative aims to curb Iraq’s reliance on Iranian gas and electricity by processing associated gas from five major southern oilfields.
- The Common Seawater Supply Project (CSSP) will inject treated seawater into southern oilfields to maintain reservoir pressure and free freshwater for agriculture.
The foundation stone for the re-entry of several major Western energy firms into Iraq was the US$27-billion four-pronged mega-project finally ratified by France’s TotalEnergies in 2023. The project was particularly aimed at addressing two critical issues that had dogged Iraq’s development for decades and whose resolution had been stymied by bureaucracy and corruption at senior levels across several governments in Baghdad, as analysed in full in my latest book on the new global oil market order. One of these crucial issues was dramatically increasing the amount of gas captured during the process of drilling for oil (‘associated gas’). And the other was stabilising and then boosting the pressure at Iraq’s key oil wells through the treatment and redirection of seawater to these sites through the ‘Common Seawater Supply Project’ (CSSP). The two other projects of the four are the full redevelopment of the Ratawi oil field and the construction of a 1.25 gigawatt-peak solar complex. In recent days, TotalEnergies chief executive officer Patrick Pouyanné announced the start of the construction of the CSSP and the Ratawi development. This means that all four major prongs of the US$27 billion project are now in their execution phase and, according to Pouyanné, the mega-project is on track to deliver its first oil, gas and solar output as soon as early 2026.
By far the most geopolitically important of the four projects is that which will capture associated gas. This might sound overblown to some outside the energy sector, or even within it, but because Iraq did not address this issue seriously earlier it was unable to use the gas for its own domestic power generation. This meant that for years that it has relied on neighbouring Iran to bridge that gap, which it did through increasingly large imports of gas and electricity. This reliance on Tehran for its power needs made Baghdad even more willing to cooperate with its neighbour on supporting pro-Shia militia groups across the Middle East and beyond, and in enabling Iran to continue to export its oil despite long-running international sanctions. The former was often focused on an anti-U.S. and anti-West insurgency that claimed dozens of military and related personnel over the years, even after the formal end of Washington’s mission in Iraq in December 2021. The latter has been achieved through a combination of shared oil fields between the two countries, forged documents, and illegal shipping practices. In turn, these elements were also part of the wider Iran-Iraq alliance that drove the influence of the ‘Shia Crescent of Power’ through the region, as also detailed in my latest book. This alliance held an extraordinary sway up until very recently over the political, economic, and security trajectories of the Middle East. With Iran at its ideological centre, the Crescent comprised key strategic assets in Iraq, Syria, Lebanon, and Yemen, with inroads being made in Azerbaijan (75% Shia and a Former Soviet Union state), Turkey (25% Shia and still furious at not being accepted fully into the European Union), Bahrain (75% Shia), and Pakistan (up to 25% Shia and a home to multiple terrorist groups antagonistic to the West). Key elements in this Shia Crescent alliance were also instrumental in 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 capture part of TotalEnergies’ mega-project is aimed at cutting this particular strand of Iraqi reliance on Iran. It involves collecting and refining gas that is currently burned off during oil drilling at the five southern Iraq oilfields of West Qurna 2, Majnoon, Tuba, Luhais, and Ratawi.
If the gas capture programme is the most geopolitically important of TotalEnergies’ four projects then the CSSP is the most important for the energy sector. The basic plan was always that the programme would 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 built out for use in further fields. Both the longstanding stalwart Iraq 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 Iraq’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). Rumaila, in the meantime, produced more than 25% of its OIP before water injection was required because its main reservoir formation (at least its southern part) connects to a very large natural aquifer that has helped to push the oil out of the reservoir. Although the water requirements for most of Iraq’s oilfields fall between these two cases, the needs for oilfield injection are highest in southern Iraq, in which water resources are also the least available, according to the International Energy Agency (IEA). To reach and then sustain Iraq’s future crude oil production targets over any meaningful period, the country 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. These demands might not appear too onerous, but these water sources will also have to continue to satisfy other, much larger, end-use sectors, including agriculture. The first phase of TotalEnergies’ CSSP programme will be built on the coast near the town of Um Qasr and is set to process and transport 5 million barrels of seawater per day to the main oil fields in southern Iraq, according to the French firm. Treated seawater will replace freshwater withdrawals from the Tigris, Euphrates, and aquifers to maintain pressure in the oil wells, freeing up to 250,000 cubic metres per day of freshwater for irrigation and local agriculture needs in the water-stressed region.
The CSSP is also crucial to ensuring the longevity of additional reserves due to be brought online in the coming years, which could make Iraq the world’s top crude oil producer. Back in 2012, as also examined in full in my latest book on the new global oil market order, then-Iraq Prime Minister Nouri al-Maliki received a confidential report (the ‘Integrated National Energy Strategy’) showing exactly how Iraq could increase its oil output from just over 3 million bpd at that point to a plateau of 13 million bpd in the ‘High Production’ scenario by 2017. The ‘Medium Production’ scenario plotted a course to 9 million bpd plateau by 2020, while the ‘Low Production’ scenario planned for 6 million bpd by 2025. The key to achieving this was a fully functioning CSSP. The output involved might also be sustained and boosted by the programme with the addition of new reserves that remain as yet untapped but have long been thought to dwarf official 145 billion barrels of proved crude oil reserves held by Iraq. In fact, in October 2010, Iraq’s Oil Ministry stated that Iraq’s undiscovered resources amounted to around 215 billion barrels. However, even this figure did not include the parts of northern Iraq in the semi-autonomous region of Kurdistan. As highlighted by the IEA, most of these had been drilled during a period before the 1970s began when technical limits and low oil prices gave a narrower definition of what constituted a commercially successful well than would be the case now. Overall, the IEA projected that the level of ultimately recoverable resources across all of Iraq (including the Kurdistan region) was around 246 billion barrels (crude and natural gas liquids).
By Simon Watkins for Oilprice.com
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