TotalEnergies' Strategic Expansion in Iraq and the Global Gas Market: Assessing Long-Term Value Creation in a Shifting Energy Landscape

TotalEnergies has positioned itself as a pivotal player in the global energy transition, balancing traditional hydrocarbon investments with a growing emphasis on low-carbon solutions. Its operations in Iraq, particularly in the Halfaya field, underscore its commitment to securing long-term hydrocarbon resources while aligning with broader decarbonization goals. However, the company's strategic value lies not only in its onshore and offshore oil projects but also in its ability to integrate these assets into a global gas market that is increasingly central to the energy transition.

Strategic Footprint in Iraq: A Pillar of Hydrocarbon Stability

TotalEnergies' involvement in Iraq dates back to its 2010 production contract for the Halfaya field, a project with an estimated 4.1 billion barrels of oil reservesTotalEnergies - Wikipedia^[2]. This field, operated through a consortium with China's CNPC and Malaysia's Petronas, represents a cornerstone of the company's hydrocarbon strategy in the Middle East. While recent 2025 data on Iraq-specific projects remains undisclosed, TotalEnergies' broader investments in the region—such as its 18.75% stake in Halfaya—highlight its focus on maintaining a stable base load of oil production amid global energy volatilityTotalEnergies - Wikipedia^[2].

The Halfaya field's significance extends beyond its size; it serves as a strategic asset in TotalEnergies' portfolio, enabling the company to hedge against the declining demand for oil in the long term. By securing high-quality reserves in politically stable regions like southern Iraq, TotalEnergies mitigates risks associated with geopolitical uncertainties in other oil-producing areas. This approach aligns with the company's dual mandate: to sustain profitability in the short term while investing in the energy transitionTotalEnergies and KOGAS Sign a 10-Year LNG Supply Agreement^[1].

Bridging Hydrocarbons and the Energy Transition: The Role of Gas

While Iraq remains a key oil-producing hub for TotalEnergies, the company's global gas strategy is equally critical to its long-term value creation. In 2025, TotalEnergies solidified its position in the liquefied natural gas (LNG) market by signing a 10-year supply agreement with KOGAS, South Korea's state-run gas company, to deliver 1 million tons of LNG annuallyTotalEnergies and KOGAS Sign a 10-Year LNG Supply Agreement^[1]. This deal not only diversifies TotalEnergies' customer base but also reinforces its role as a supplier of cleaner-burning fuels in markets transitioning away from coal.

The company's gas strategy is further bolstered by its operations in Nigeria and Norway, where it has achieved zero routine flaring and invested in carbon capture and storage (CCS) technologiesTotalEnergies - Wikipedia^[2]TotalEnergies publishes its Sustainability & Climate 2025 Progress Report^[3]. These initiatives demonstrate TotalEnergies' ability to apply lessons from its African and European projects to its Iraqi operations, potentially transforming the Halfaya field into a model for responsible hydrocarbon production. For instance, integrating methane detection technologies and flaring reduction measures in Iraq could align its oil projects with global sustainability standards, enhancing their long-term viabilityTotalEnergies in Nigeria^[5].

Navigating Market Risks and Oversupply Concerns

Despite its strategic advantages, TotalEnergies faces challenges in the global gas market. The company's CEO, Patrick Pouyanne, has warned that the rapid expansion of U.S. LNG infrastructure could lead to a global oversupply, undermining long-term price stabilityTotalEnergies CEO says US LNG drive may cause global oversupply^[4]. This risk is particularly relevant for TotalEnergies, as its LNG supply agreements—such as the KOGAS deal—are designed to lock in demand over a decade. To mitigate this, the company is diversifying its LNG sources and exploring partnerships in emerging markets, ensuring its gas portfolio remains resilient to regional imbalancesTotalEnergies and KOGAS Sign a 10-Year LNG Supply Agreement^[1].

Long-Term Value Creation: Balancing Profitability and Sustainability

TotalEnergies' 2025 Sustainability & Climate Progress Report underscores its commitment to reducing Scope 1+2 emissions by 37 Mt CO2e and cutting methane emissions by 60% compared to 2020 levelsTotalEnergies in Nigeria^[5]. These targets, while ambitious, are achievable through technological innovation and operational efficiency. In Iraq, where the company's environmental impact is most pronounced, adopting these practices could enhance its social license to operate and attract capital from ESG-focused investors.

Moreover, TotalEnergies' investments in sustainable forestry and renewable energy—such as its recent entry into the U.S. power grid via PJM Interconnection—demonstrate a broader diversification strategyTotalEnergies publishes its Sustainability & Climate 2025 Progress Report^[3]. By pairing its Iraqi oil assets with renewable projects elsewhere, the company is creating a hybrid portfolio that balances near-term cash flows with long-term decarbonization goals. This approach not only strengthens its financial resilience but also positions it as a leader in the energy transition.

Conclusion: A Strategic Duality in a Shifting Landscape

TotalEnergies' operations in Iraq and its global gas initiatives exemplify a strategic duality: leveraging hydrocarbon assets for short-term stability while investing in technologies and partnerships that align with the energy transition. The Halfaya field, though an oil project, serves as a foundation for long-term value creation when paired with the company's LNG and sustainability efforts. As the energy landscape evolves, TotalEnergies' ability to integrate these dual strategies will determine its success in navigating market risks and capitalizing on emerging opportunities.