Iraq's Strategic Shift: New Allies in Energy Amid U.S.-Iran Tensions

In response to U.S. sanctions ending Iraq's ability to pay Iran for gas, Baghdad seeks fuel alternatives from Qatar and Oman. The Iraqi government is fast-tracking agreements, including a leased LNG terminal from UAE-based Breeze Investment. This shift aims to prevent disruptions in Iraq's electricity supply.

In a significant energy policy shift, Iraq is exploring new alliances with Qatar and Oman to secure gas supplies, following the U.S. decision to halt Iraq's payments to Iran for electricity. The strategic move aims to circumvent potential disruptions in light of the intensifying 'maximum pressure' campaign by the U.S. against Tehran.

Iraq's current dependence on Iranian gas is substantial, with imports reaching up to 50 million cubic meters per day. Energy officials have highlighted the fiscal impact, estimating an annual spend of $4-5 billion for these imports. The prospect of losing this supply puts Iraq's electricity output, currently at 27,000 megawatts per day, at risk of being slashed by a third.

To alleviate the looming crisis, Iraq's South Gas Company is spearheading efforts to lease a floating liquefied natural gas terminal. The agreement is set with UAE-based Breeze Investment, expected to operationalize by mid-year. This strategic pivot is crucial for maintaining energy stability as Iraq prepares to tap into gas reserves from Qatar and Oman.