Iraq, the second-largest OPEC producer after Saudi Arabia, struggles to generate enough energy due to production and transmission inefficiencies.
Iraq is accelerating the construction of an offshore liquified natural gas (LNG) terminal and a 40km pipeline. Baghdad, the capital of Iraq, is trying to import more LNG after the United States (US) decided to remove the country’s exemption to restrictions on buying gas from Iran.
Ali Shaddad, a member of the parliament’s oil and gas committee, stated that pipeline construction that would carry gas from an offshore platform to Basra, an Iraqi city, started a month ago and is anticipated to be finished in 120 days.
In January 2024, Iraq approved a plan to construct a “permanent platform” for LNG imports. However, construction of a facility is costly and will take around 2 to 5 years. The LNG terminal will be operational in 2026.
Shaddad stated that the portable offshore terminal would receive gas from a Gulf country to compensate for the loss of Iranian supplies.
He did not name the Gulf country, but Iraq has looked to import LNG from Qatar for the past two days as Tehran’s gas supplies have steadily decreased due to a rise in domestic gas consumption in Iran.
Iraq, the second-largest OPEC producer after Saudi Arabia, depends on oil and gas to run its power plants. But, it struggles to generate enough energy due to production and transmission inefficiencies.
The country has the fifth largest natural gas resource in the Middle East and produces more than 3.1 billion cubic feet per day (cfpd), but it wastes 40% to 50% of its output due to a lack of gas collecting and processing infrastructure.
Under the US sanctions waiver, Iraq has been able to import around 10 gigawatts(GW), or 40% of its energy needs, from Iran, although the quantity has dropped below 2GW in recent months.
However, the Trump administration declined to extend the waiver as part of a “maximum pressure campaign” against Tehran.
The US Department of State stated they decided not to renew the waiver to ensure that they would not ensure that Iraq gets any economic or financial relief.
The waiver was introduced in 2018 when Washington reinstated sanctions on Tehran after Trump withdrew from a nuclear deal with Iran negotiated under US President Obama. Trump, at the time-imposed US penalties on any other country buying Iranian oil. The waiver was extended to Iraq as a significant US partner.
A representative for the United States embassy in Baghdad stated that the president’s maximum pressure campaign aims to eliminate Iran’s nuclear threat, limit its ballistic missile development, and prevent it from aiding terrorist groups.
The spokesperson called on Baghdad to quickly eliminate its reliance on Iranian energy sources.
Iranian gas supplies to Iraq of 50 million cubic meters per day were halted in early December due to strong domestic demand since people needed more energy during the winter season.
Iraq intends to build a second offshore LNG plant in Khor Al-Zubair to reduce its dependency on Iranian gas.
It has given more than 20 contracts to international companies and accelerated projects to develop its gas resources.
Baghdad signed an agreement with BP, a UK oil company, to reconstruct four oil and gas sites in the northern Kirkuk region and stop gas wastage.
The second $27 billion project signed in 2023 with French company TotalEnergies aims to increase Iraq’s domestic gas production by roughly 600 million cubic feet per day by 2028.
Baker Hughes, a US energy technology corporation, is also working to develop the Nasiriyah and Gharraf fields, which will be finished by mid-2026.