Iraq has signed agreements with two American companies to produce 27,000 megawatts of electricity a month after the US refused to renew a sanctions waiver that allowed Baghdad to purchase energy from Iran.
The deals were signed late on Wednesday and come at a time when demand for electricity across Iraq is set to increase owing to soaring summer heat. The weather usually results in persistent power cuts, leaving millions of Iraqis without electricity.
The agreements were overseen by Iraqi Prime Minister Mohammed Shia Al Sudani, whose office said in a statement that the deals were “part of a strategic co-operation framework” between Baghdad and Washington.
The first deal with GE Vernova “covers projects to establish combined-cycle gas power plants with a total capacity of approximately 24,000MW, marking the largest and most advanced electricity generation initiative in Iraq’s history”, the statement said.
The second deal was signed with UGT Renewables to establish a three megawatts integrated solar energy project, for which the US Export-Import Bank, UK Export Finance and JP Morgan will provide financing. The agreement includes a two-year period for technology transfer, training, operation and maintenance, Mr Al Sudani’s office said.
The two deals will double Iraq’s current electricity production, which stands at about 27,000MW per day.
The country imports 50 million cubic metres of natural gas to feed power plants and 500 megawatts of electricity a day from Iran. This helps to supply at least one third of the country's daily electricity needs.
It imports 300MW from Turkey, with plans for that to double to 600MW in the coming months. It also imports 40 MW from Jordan and will be increased to 150-200 MW by the end of July.
It comes as a high-level US trade delegation visited Iraq. It included representatives from 60 companies was led by Steve Lutes, executive director of Middle East Affairs at the US Chamber of Commerce.
“We think that we can compete with anyone when given a level playing field,” Mr Lutes said during an event in Baghdad.
“American companies want to lean into, you know, ideas of energy diversification and economic diversification,” he added.
There are “a lot of opportunities in oil and gas, and we want US companies pursuing those”, he said.
To avoid power cuts, Iraq needs to boost its energy grid with an additional 55,000MW during peak hours, with temperatures often passing 50°C during the summer.
The deals with GE Vernova and UGT Renewables are worth billions of dollars, the US Embassy in Baghdad said on X. It did not give further details. The timeline and exact costs of the projects were not disclosed.
In March, Washington refused to renew a 120-day sanctions waiver for Iraq’s energy imports from Iran as part of US President Donald Trump's “maximum pressure” campaign against Tehran. The US State Department said Iraq's transition away from dependency on Iranian imports provides an opportunity for US companies.
Iranian electricity and gas imports, which accounted for up to 40 per cent of Iraq's power supply in 2023, are essential to meet the country's energy needs.
