Iraq accelerates projects to address expected electricity shortage after US sanctions

Washington has declined to renew a waiver that had allowed Iraq to buy electricity from neighbouring Iran, bypassing the sanctions

A man works on the cables of a private electricity generator provider in Baghdad's Sadr City district. AFP

Iraq is moving urgently to mitigate the anticipated electricity deficit this summer after the US declined to renew a waiver that had allowed it to buy electricity from Iran, bypassing sanctions.

The US administration rescinded a waiver on Saturday as part of US President Donald Trump's “maximum pressure” campaign against Tehran, which is “designed to end Iran’s nuclear threat, curtail its ballistic missile programme and stop it from supporting terrorist groups”, the US embassy in Baghdad said.

“We urge the Iraqi government to eliminate its dependence on Iranian sources of energy as soon as possible,” it added, welcoming Iraqi Prime Minister Mohammed Shia Al Sudani's commitment to achieve energy independence.

Despite being Opec’s second-biggest producer, Iraq is dependent on Iran for about a third of its electricity needs. It buys 50 million cubic metres of natural gas and 500 megawatts of electricity a day from Iran.

Hours after the US announcement, Mr Al Sudani chaired a meeting to discuss the electricity supply for the upcoming summer and the continuing projects to develop gas reserves.

Mr Al Sudani decided to push several energy-related projects such as linking power stations with gas sources, and installing floating platforms for imported gas.

“We are working on installing floating platforms in our ports which will be crucial for us to import gas from other countries,” Iraqi Electricity Ministry spokesman Ahmed Moussa told Iraq's state TV. “This is a remarkable achievement,” Mr Moussa said.

Iraq's Minister of Electricity, Ziad Ali Fadel, presented a plan to secure electricity supply as well as the operational plan for fuel stations, a statement from the Prime Minister's office said.

For his part, Hayan Abdul Ghani, Minister of Oil, outlined the strategy for supplying power plants with fuel, the agreed quantities, and the floating and mobile gas platforms.

Iraq is in the final stages to finalise a deal with Turkmenistan to import 20 million cubic metres a day of gas in a pipeline that goes through Iran, he added. It also began importing electricity from Jordan through a 340km line in March last year, and aims to connect to the Gulf Co-operation Council's (GCC) power grid by late this year.

On Sunday, the US Charge d’Affaires, Daniel Rubinstein met the Head of the Iraqi Parliament’s Finance Committee Atwan Al Atwani to discuss the impact of the US sanctions on the country's electricity sector. According to the statement from Mr Al Atwani’s office, Mr Rubinstein said that “till now importing natural gas is not covered by the sanctions”.

On Monday, Iran's Foreign Ministry described the decision to end a sanctions waiver as “illegal”.

“Such statements are an admission of lawlessness, an admission of crimes against humanity, because the US sanctions, the unilateral US sanctions, against the Iranian nation have no justification or legal basis,” ministry spokesman Esmaeil Baqaei said.

Baghdad has been under pressure from the US to wean itself off Iranian energy imports, which have been subject to US sanctions since 2018. Since then, Washington has repeatedly extended waivers to Baghdad for periods of 45 to 120 days to be able to import Iranian electricity and gas.

In recent years, Iraq has taken some measures to develop its natural gas resources and reduce the shortfalls in the electricity sector that has been continuing for decades. Iraq’s natural gas reserves stand at about 3,714 billion cubic metres, according to Oil Ministry figures.

In April last year, it signed a deal with Ukraine’s Ukrzemresurs company to develop Akkas gasfield in the western part of the country. The company will increase production, from 60 million standard cubic feet per day (scfpd) at present to 100 million within two years. That will increase to 400 million within four years.

Iraq is also working on a deal it signed in 2023 with French company TotalEnergies to develop oil and gas and renewable energy projects worth $27 billion. It also signed several others projects with other companies for solar power plants.