Iraq’s attempt to relieve its chronic energy shortage with Turkmenistan gas transported through the neighboring tracks failed under American pressure, letting Baghdad rush for alternatives to keep the lights on.
Iraq rich in oil has struggled to provide its citizens with power since the Invasion led by the United States 2003 which overthrew Saddam Hussein, forcing a lot to rely on expensive private generators, causing economic difficulties and provoking social troubles.
Hussain Saad, a 43-year-old owner of a butcher’s shop in the Kasra district of Baghdad, has trouble protecting his livelihood and preventing his meat from spoiling in the hot heat.
“It is not only my suffering-it is the suffering of all the Iraqi people,” he said.
An agreement proposed for the first time in 2023 would have seen Turkmenistan export from gas to Iraq via Iran, which is between the two countries. Under the exchange agreement, Iran would receive gas and provide it to Iraq, but that risked raping American sanctions in Tehran – requiring Washington approval.
This approval has never come. The administration of the American president Trump doubled on a campaign of “maximum pressure” against Tehran.
Taken between two allies
Reuters spoke with four Iraqi officials and examined seven official documents to reveal how Baghdad had requested Washington approval for months to allow it about five billion cubic meters (BCM) of Turkmene gas via Iran.
Iraq has sought to import 5.025 bcm of Turkm gas per year, facilitated through the Iranian Gas Company (NIGC) Iranian Iran, according to a project of contract of the Swap Observed by Reuters.
Iran would not receive money, but would get gas for its own needs, not exceeding 23% of the global daily volume from Turkmenistan, showed a document.
Baghdad also proposed to allow a third-party international instructor to supervise the compliance of the agreement with American sanctions and anti-whithening rules, the same document has shown.
But despite months of lobbying, the US objections finally explained the agreement while Washington increased pressure on Iran on its nuclear plans. This left Baghdad in the face of an increasingly difficult balance between its main allies in Washington and Tehran.
“The procedure (with the Turkmen agreement) could trigger sanctions against Iraqi banks and financial institutions, so that the contract is currently suspended,” Adel Karim, adviser to the Iraqi Prime Minister for electricity affairs, told Reuters.
The US Treasury refused to comment, but an American source familiar with the case said that the Trump administration would not approve of the arrangements that could benefit Iran, although it worked with Iraq on its energy needs.
The Iranian government, the Department of Petroleum, the NIGC and the Turkmen Foreign Affairs Ministry have not responded to requests for comments from Reuters.
Iranian gas resilience from Iraq
Iraq relied on imports of gas and electricity from Iran over the past decade. Iranian gas covers almost a third of Iraqi electricity production and in 2024, gas imports reached 9.5 billion Go, said an Iraqi energy official, who asked not to be appointed due to the sensitivity of the problem.
“If we lose Iranian gas, we are going to face a serious problem in electricity production,” said Karim.
Although Iraq is the second oil producer of OPEC, it burns a large part of the gas it produces alongside oil due to underinvestment and a lack of infrastructure to capture and treat it.
The country has extracted only 11 BCM of gas in 2023 which could be used for electricity or industrial needs, according to the IAI. Iraqi gas requirements varied seasonally, demand increasing in summer to around 45 million cubic meters (MCM) per day, Karim said, if not falling at 10-20 mcm per day.
Scupper Turkmans Deal Sanctions
In March, the Trump administration ended a renunciation of sanctions that, since 2018, has allowed Iraq to pay the Iranian power, reducing imports.
The absence of gas supplies from Iran has led to a loss of approximately 3,000 megawats of electricity since the end of the derogations and the peak summer demand has established – more than 10% of the 28,000 MEGAWATTS of Iraq in total capacity, said Karim, enough to have an impact on approximately 2.5 million houses according to Iraqi electricity officials.
Baghdad hoped to diversify its supply and avoid the risk of violating sanctions with the Turkmen agreement, sources and documents have shown.
Not obtaining this agreement could compromise Baghdad’s ability to maintain gas factories during the cutting -edge summer request, warned the Iraqi electricity ministry in a letter to the Iraq State Commercial Bank (TBI) on May 27, three months before a national failure in August.
Diversification via Qatar LNG
With the Blocked Turkmen route, Iraq explores alternatives to connect its power of power, including construction infrastructure to import Liquefied natural gas (LNG) from Qatar.
Hamza Abdul Baqi, head of the South Gas company belonging to the State, told Reuters in March that Iraq would rent a floating terminal of LNG to manage Qatari and Omanai gas. The government had in charge of the Ministry of Petroleum to find alternatives to Iranian gas in case the United States has decided to restrict it, he said.
The country has also signed agreements with global oil majors such as Totalnnergies, BP and Chevron in the past two years to accelerate its petrol projects.
Totalnnergia’s major in French oil said this week that it had launched the second phase of development at the Iraqi Ratawi field, the final stages of a 27 billion dollars project which aims to stimulate the production of oil, gas and electricity from Iraq.
The British COP said in March that it had received the final approval of the government for the redevelopment of the giant oil fields of Iraqi Kirkuk, with an initial plan to produce 3 billion barrels of oil equivalent.
“We expand our gas power plants,” said Karim. “We will need more gas and more sources.”
