In alignment with the conditions set forth by the administration of former US President Donald Trump, Iran ceased gas exports to Iraq today, generating mixed reactions from the US State Department and raising concerns among Iraqi specialists and the Ministry of Electricity.
“The United States has revoked all existing exemptions from the sanctions that facilitate economic support for Iran,” remarked Tami Bruce, a spokesperson. Her statement emphasized the end of the exemption that allowed Iraq to compensate Iran for electricity, indicating, “We don’t disclose specifics regarding exemptions, but we are actively reviewing all current sanctions waivers that may offer Iran any form of economic or financial relief.”
“We urge the Iraqi government to expedite its efforts to reduce reliance on Iranian energy sources, and we appreciate Prime Minister Muhammad Shi’a Al-Sudani’s commitment to achieving energy independence,” Bruce added, marking the first statement under the current administration.
These recent exemptions from US sanctions, initially granted during President Joe Biden’s term, are set to expire on March 7, 2025, reflecting a strategic timeline of 120 days post-implementation.
The Trump administration had signaled a firm decision against renewing any exemptions through a national security memorandum dated February 4, 2025, aimed at reinstating a policy of maximum pressure on Iran.
Electricity Ministry spokesman Ahmed Moussa elaborated that “the United States had been granting Iraq exemptions to assess its diligence in rehabilitating national gas fields, adopting domestic gas policies, and initiating renewable energy projects. This monitoring was essential for the continued waivers.” He noted that “the exemption was valid for four months and concludes today,” adding that “the government is attempting to secure another exemption while it finalizes the development of national gas fields.”
Moussa underscored that “the Iraqi government, alongside the ministries of electricity and oil, has been diligently working towards leveraging national gas to develop local gas fields and curtail the flaring of associated gas.” He pointed out that “the Ministry of Electricity is actively pursuing diversification of gas sources, achieving an agreement with Turkmenistan to import 20 million cubic meters of gas per day.”
Moussa expressed optimism about completing the necessary procedures for the Turkmenistan agreement, indicating the ministry’s ongoing commitment to diversify energy sources. This includes projects capable of generating 4,000 megawatts through non-fossil fuel methods, solar energy, and waste recycling initiatives, ensuring that the portfolio remains fuel-independent.
The Ministry has ambitious plans for steam stations capable of producing 15,000 megawatts with domestic fuel sources, showing a proactive approach to mitigate reliance on imported fuels and diversify energy inputs. He cautioned that “should gas imports cease, certain facilities will suffer, particularly during peak summer demand.”
Moussa further noted that “the Iraqi government is fully synchronized regarding oil decisions, which include importing 600 gas tankers through floating liquefied gas platforms at Iraqi ports. This measure is designed to be temporary, assuming completion before the next summer season, which would mitigate the impact of any import halts.” He acknowledged that “currently, Iraqi power generation relies on imported gas for 8,000 to 9,000 megawatts, marking a critical dependency.”
He added, “To date, the ministry has not received any formal notification regarding a cessation of gas imports,” expressing hope for the successful completion of procedural audits involving the company managing gas transport from Turkmenistan to Iraq.
Moussa continued to detail the Ministry of Oil’s import strategies, having received governmental approval for the transportation of 600 gas units via liquefaction platforms. He outlined the Ministry’s commitment to renewable energy, including converting 543 government buildings to solar energy systems and providing small loans to citizens for the purchase of solar energy setups.
Notably, successive Iraqi governments have invested approximately $98 billion in the electricity sector from 2006 through December 31, 2024, yet reliable electricity remains elusive.
In a related statement, the Prime Minister for Electricity Affairs, Adel Abdul Karim, commented on the reliance on Iranian gas, which presently underpins around 40% of Iraq’s electricity generation. He acknowledged that the termination of the gas import license would negatively impact power production, but expressed hope for its extension.
Abdul Karim affirmed the affordability of Iranian gas for Iraq, despite ongoing discussions about utilizing gas from alternative sources, while reiterating that the resolution of the electricity dilemma would necessitate time.
Iraq’s electricity infrastructure continues to be handicapped by a lack of gas imports, leading to significant power losses. In recent months, the Iraqi electrical grid has lost over 5,500 megawatts due to the interruption of Iranian gas supplies, resulting in diminished electricity availability throughout various cities.
Prime Minister Muhammad Shi’a Al-Sudani recently urged for continued exemptions from sanctions on gas imports from Iran following the announcement of their cessation. He highlighted a strategic vision wherein Iraq anticipates a complete transition away from gas imports by 2028, underscoring the necessity of sustained exemptions during this period.
On February 5, Trump announced the re-imposition of stringent sanctions against Tehran, mirroring the approach of his initial term, aimed at intensifying pressure on Iran in light of concerns over its nuclear development activities.
The memorandum entailed the termination of exemptions for Iraq regarding the importation of electricity and gas from Iran, mandating immediate actions to prevent the Iraqi financial system from being exploited by Iran to evade sanctions, as well as ensuring that Gulf states are not used as conduit points for circumventing restrictions.
Energy analyst Kovand Sherwani indicated in a separate analysis that a full cessation of Iranian gas would create a power deficit of 7,000 to 8,000 megawatts, warning that such a scenario could lead to significant challenges in the coming summer. He advised that Iraq should seek alternatives and press forward with ongoing natural gas investment projects in the southern fields.
On October 19, 2024, the Ministry of Electricity formalized an agreement with Turkmenistan to supply up to 20 million cubic meters of gas daily, facilitated by Luxon Energy, which will transport the gas via the Iranian pipeline network under a swap arrangement.
However, the contract for importing Turkmen gas through Iranian infrastructure has yet to be activated, attributed to procedural delays at the Iraqi Trade Bank (TBI).
Despite significant financial outlays in the electricity sector, Iraq’s energy infrastructure remains beleaguered by persistent inefficiencies. According to government advisor and economic expert Mazhar Muhammad Saleh, over $120 billion has been expended since 2003 to secure electrical energy, but sustainable solutions remain hindered by issues of mismanagement and corruption.
Since 2023, the US has provided exemptions enabling Iraq to remit funds to Iran for electricity, stipulating that Tehran can only use these funds for transactions involving non-sanctioned items, including food and agricultural imports.
Consequently, the inadequate provision of electricity fosters a thriving market for civil generators, many of which are outdated, generating excessive emissions and noise due to insufficient adherence to noise-reduction regulations.
Over the years, the absence of meaningful improvement in Iraq’s electricity supply has precipitated recurring protests in central and southern cities each summer by citizens demanding improved energy availability.
