Iraq’s energy sector is at risk due to US sanctions on Iranian gas imports, which could lead to a crisis as 40% of its electricity supply comes from Iran. The Iraqi government is seeking alternatives, including gas imports from Turkmenistan and solar power development through partnerships with companies like TotalEnergies. Immediate solutions to reduce reliance on Iranian gas are crucial for the country’s energy stability.
Iraq is facing a looming energy crisis as President Donald Trump’s administration terminates its exemption from sanctions on Iranian gas and electricity imports. The executive order is intended to hinder Iraq’s engagement with the US financial system to prevent Iranian sanctions evasion and discourage Gulf nations from acting as transit routes for Iranian energy exports. This move is part of a larger strategy to diminish Iran’s oil exports, including shipments to China, under the reinstated “maximum pressure” campaign.
In anticipation of these sanctions, Iraq has been proactive, entering contracts with various companies to bolster energy supplies and tackling the impending total lockdown on its eastern border. Bassem Naghimash, a member of the Iraqi Parliament’s Oil and Gas Committee, voiced concerns regarding the lack of diversification in gas sources amidst the ongoing Iranian gas crisis. He emphasized that while nations like Jordan, Turkmenistan, and Qatar have been suggested as alternative suppliers, the country’s ability to invest in domestic gas solutions remains constrained due to insufficient government financial and logistical backing.
Kazem Al-Touki, another committee member, remarked on the challenges posed by infrastructure limitations associated with sourcing gas from Qatar. He highlighted that US sanctions hindered potential deals, particularly since the intermediary company involved is Iranian-owned. Al-Touki indicated that discussions concerning solutions to the Iranian sanctions fallout would soon include the ministers of electricity and oil.
Economic analyst Nabil Al-Marsoumi underscored the critical nature of Iranian gas, which constitutes around 40% of Iraq’s electrical grid supply, equating to approximately 8,000 MW. He cautioned of dire repercussions should the sanctions be enforced. Saeed Shavardi, an Iranian economic expert, reiterated that the gas trade is vital for Iraq’s electricity generation and noted that the Iraqi government would encounter immense pressure from the United States regarding this issue.
To address the energy shortfall in the long term, Al-Marsoumi proposed the construction of liquefied natural gas (LNG) import infrastructure at Al-Faw port and the development of solar projects, estimating these initiatives could contribute an additional 3,000 MW to the electricity grid within three years. He mentioned that Turkmenistan could provide around 4,000 MW of electricity; however, this would only partially meet the country’s requirements.
In August 2023, Iraq finalized a significant agreement with Turkmenistan aimed at importing gas, with the electricity minister confirming that these imports would cut reliance on Iranian gas by 50%. However, domestic gas development is expected to require three to five years to realize its benefits. France’s TotalEnergies has also taken steps to enhance Iraq’s energy landscape by signing an agreement to establish a 1,000-MW solar power plant in Basra, with the construction projected to span three years, according to the Basra Investment Commission.
In summary, Iraq’s energy sector is under significant threat due to the cessation of US sanctions exemptions on Iranian imports, which could lead to an energy crisis. The government is taking steps to diversify its energy sources, with a focus on both international partnerships and domestic solutions. While immediate challenges remain, initiatives like solar power projects and gas imports from Turkmenistan may provide some relief in the longer term.
Original Source: www.intellinews.com
