Shafaq News/ Iraq, one of the world's largest oil producers, has long relied on petroleum for its economy and energy sector. However, this dependence has left the country vulnerable to economic volatility and energy insecurity, particularly due to its reliance on imports to meet domestic electricity demand.

Power Play: Iraq’s Energy Reality

Despite vast oil reserves, Iraq struggles to generate enough electricity due to inefficiencies in energy production and transmission. Oil remains Iraq’s primary energy source, accounting for most of its exports and domestic consumption, with the country producing about 4.5 million barrels per day in 2023, positioning it as one of OPEC’s top producers.

Natural gas serves as a secondary energy source for electricity generation, but Iraq wastes a significant portion due to inadequate infrastructure. In 2022, Iraq flared over 630 billion cubic feet of gas, making it the world’s second-largest gas-flaring country, contributing to both resource waste and environmental pollution.

This inefficiency has led to Iraq's heavy reliance on energy imports, particularly from Iran, making the country vulnerable to geopolitical tensions and international sanctions. In addition, Iraq has pursued limited energy imports from Jordan, providing approximately 150 megawatts of electricity, while Qatar has been identified as a potential supplier of liquefied natural gas (LNG), though the necessary import infrastructure is still under development.

4,000 Megawatts Down

Iraq's energy infrastructure is closely tied to Iranian imports, which supply one-third to 40% of the country's electricity and gas needs. Iran also provides 1,200 MW of electricity daily to Iraq. This reliance became particularly evident when the Iraqi Ministry of Electricity reported a complete halt in Iranian gas supplies. These disruptions resulted in a significant 4,000-megawatt drop in national grid capacity, severely straining the electricity supply and causing widespread power shortages across multiple governorates. Such incidents expose the vulnerabilities of Iraq's "primitive" gas policy.

The economic ramifications of this dependence are significant. Between 2003 and 2021, Iraq's Ministry of Electricity spent over $80 billion on energy imports, pushing the total to nearly $100 billion over two decades. Despite these expenditures, power shortages continue, exacerbated by fluctuating oil revenues and broader economic pressures.

Geopolitical factors further complicate Iraq’s energy landscape. US sanctions on Iran have, at times, hindered Iraq’s ability to make payments for energy imports, leading to supply uncertainties. Additionally, regional tensions and internal political dynamics can disrupt the steady flow of energy, as seen in cases where maintenance issues or infrastructural problems in supplier countries have led to unexpected energy cuts.

Energy Independence Blueprint

To address these vulnerabilities, Iraq is implementing a comprehensive strategy to diversify its energy portfolio, enhance domestic production, and integrate renewable sources into the national grid.

A key component of this plan is the expansion of domestic gas production to reduce dependence on imports. In January 2025, TotalEnergies began constructing the ArtawiGas25 processing facility in the Artawi oil field, designed to handle 50 million cubic feet of gas per day that would otherwise be flared. This project alone is expected to provide electricity to around 200,000 households in the Basra region. As part of a broader $10 billion investment over four years, TotalEnergies aims to reinforce Iraq’s energy infrastructure, ensuring a more stable and self-sufficient energy supply.

Collaborations with companies such as Baker Hughes and the Iraq National Oil Company are also underway, focusing on gas capture and processing. Iraq has set a target of achieving zero routine gas flaring by 2027, a goal that could unlock an additional 3.5 gigawatts of power. “Reducing gas flaring is not just about energy efficiency, it’s about protecting our environment and maximizing our resources,” stated an official from Iraq’s Ministry of Oil, highlighting the long-term impact of these initiatives.

At the same time, Iraq is investing in LNG infrastructure to meet immediate energy demands while mitigating supply risks. Plans are underway to establish a fixed offshore LNG terminal in Faw, along with a floating LNG platform, both expected to be operational by 2026. By diversifying import sources, Iraq aims to reduce its dependence on pipeline-dependent energy supplies, creating a more secure and flexible energy landscape.

Regional cooperation remains a key pillar of Iraq’s strategy. In March 2024, Iraq signed a five-year agreement with Iran’s National Gas Company to import 50 million cubic meters of natural gas daily, ensuring a steady power supply. Additionally, Iraq has sought integration into the Gulf Cooperation Council (GCC) power grid to enhance long-term energy security.

At the same time, Iraq has turned to Turkmenistan as an alternative energy partner amid disruptions in Iranian gas supplies. In August 2023, it signed a memorandum of understanding to import Turkmen 20 million cubic meters of gas to help fuel its power plants. However, because the gas must transit through Iran, the deal remains vulnerable to US sanctions, raising concerns about its long-term reliability. Even if fully implemented, it would generate only 3,000 to 4,000 MW, insufficient to meet Iraq’s growing energy needs.

Hence, to strengthen its energy security, a new agreement involving TurkmenGas and Turkiye’s BOTAS was signed and is set to take effect on March 1. Under this deal, Turkmenistan will supply gas to Iraq via Turkiye, utilizing BOTAS’s infrastructure to facilitate transit. This partnership not only helps Iraq secure additional energy sources but also strengthens its ties with regional energy players, offering an alternative route to reduce reliance on Iran.

Finally, by November 2024, Iraq successfully integrated into the GCC electricity grid, securing 3.94 terawatt-hours of electricity annually at competitive rates. These agreements are pivotal in strengthening Iraq’s energy security, reducing localized shortages, and fostering economic stability.

Sun, Dams, and Dreams

Iraq is also shifting toward renewable energy to address electricity shortages and reduce its dependence on fossil fuels. The government aims to generate 33% of its electricity from renewable sources by 2030, equivalent to 12 gigawatts. A flagship project is a 1.25-gigawatt solar power plant in Basra, developed with TotalEnergies and QatarEnergy, which will provide electricity to 350,000 homes. Other large-scale solar farms are under construction, including a 750 MW project in al-Muthanna province and two plants totalling 525 MW, with companies like Masdar and PowerChina playing key roles in these efforts.

Hydroelectric power is also a crucial component of Iraq’s renewable energy strategy. As of 2023, Iraq had an installed hydroelectric capacity of 2.5 gigawatts, with major dams like Mosul (1,062 MW), Haditha (660 MW), and Dokan (400 MW) contributing to both energy generation and water management. Additional projects, such as the Deralok Dam in Kurdistan, are expected to increase capacity further.

To accelerate the adoption of renewable energy, Iraq is offering financial incentives. The Central Bank of Iraq allocated one trillion dinars ($685 million) in interest-free loans to support solar panel installations in homes and public buildings. These efforts aim to decentralize energy production, reduce pressure on the national grid, and lower energy costs for consumers.

Despite the challenges posed by political instability and infrastructure limitations, Iraq’s shift toward renewable energy, bolstered by international partnerships and strategic investments, positions the country for long-term sustainability. As Bassem al-Ghuraybawi, a member of the parliamentary oil and gas committee, remarked, Iraq is working to diversify its energy portfolio while continuing to rely on oil production.