TotalEnergies pulls foreign staff out of Iraq after failure of high-level talks

Dubai/London — French oil major TotalEnergies is pulling its foreign staff from Iraq as it struggles to resolve challenges with Baghdad over a $27bn cluster of major energy projects, three sources told Reuters.

Foreign staff have left the country while TotalEnergies has asked local employees to work from home, according to one of the sources. The news was first reported by Iraq Oil Report.

TotalEnergies declined to comment, while Iraq’s oil ministry did not immediately respond to a request for comment.

It is unclear if the withdrawal is simply a negotiating tactic, member of Iraqi parliament Mustafa Jabbar Sanad wrote in a Twitter post on January 30.

Iraq’s demand for a 40% share in the project is a key sticking point for the long-delayed deal, while TotalEnergies wants a majority stake, three sources said.

The disagreement caused a meeting last week between Iraqi Prime Minister Mohammed al-Sudani, who took office last October, and TotalEnergies CEO Patrick Pouyanne to turn sour, one of the sources said.

Baghdad cannot cancel the previous government’s decision to demand 40%, two sources said, as this would be seen as giving away Iraq’s rights.

ExxonMobil, Shell and BP have all sought to scale back their operations in Iraq in recent years, contributing to a stagnation in Iraq’s oil production.

TotalEnergies rekindled hopes for the sector in 2021 when it signed a deal with Baghdad to build four oil, gas and renewables projects with an initial investment of $10bn in southern Iraq over 25 years.

Iraq’s oil production capacity has grown to about 5-million barrels per day from 3-million bpd in recent years. Yet at one time there had been hopes of rivalling top producer Saudi Arabia with its output of 12-million bpd, or more than a tenth of global demand.

The deal with TotalEnergies has stalled, however, amid disputes between Iraqi politicians over its terms, which have not been made public, sources familiar with the situation told Reuters early in 2022.

Iraq remains optimistic that the deal just needs time. The head of Iraq’s Basra Oil Company said on Wednesday that he expects Qatar to acquire a 20-25% stake in the project and that the deal would be activated within three months.

Reuters