A gas supply agreement signed by Iraq and Turkmenistan in 2023 may never begin because of challenges with transiting the gas through neighbouring Iran, Iraqi analysts say.

The deal was for nearly 20 million cubic metres of natural gas per day to supply Iraq’s power facilities, but Iraq and Turkmenistan do not share a border.

“Given Iran’s history of problems, including risks, international sanctions and pressures on Iraq, I believe this gas route to Iraq is not practical,” said Walid Khaddouri, a prominent Iraqi energy analyst and a former director at the Kuwaiti-based Arab Energy Organization.

This means that Iraq, Opec’s second-largest oil producer after Saudi Arabia, may once again turn to Qatar for its gas needs. This option would be costly because of a need to build liquefied natural gas (LNG) facilities in Iraq, the analysts say.

“Iraq would be better to look inward for its gas needs because it is awash with gas. There are big gas reserves, which need to be exploited and which can provide Iraq with all its needs,” Khaddouri told AGBI. 

Iraqi Prime Minister Mohammed Al-Sudani said last week that the country plans to stop importing Iranian gas by 2028 due to persistent disruptions in supply. As a result, Iraq’s power generation capacity plunged in December, according to officials.

Iraq’s Electricity Ministry had said late last year that it still needs to devise payment plans for the proposed Turkmen gas.

“Getting gas from Turkmenistan requires finalising a contract with an intermediary company to ensure such supplies are delivered and not interrupted. I don’t think it is easy to find that company since Iran is under sanctions,” said Nabil Al-Marosoumi, economics professor at Iraq’s Basra University. “There also must be payment arrangements, which require at least eight months to be finalised.”

Even if a final deal went ahead, 20 million cubic metres per day of Turkmen gas would generate no more than 4,000 megawatts of electricity, not enough to meet Iraq’s power needs, Marsoumi said.

More realistic options would be to buy Qatari LNG, and develop local gas field deposits and solar power capacity, Marsoumi said. France’s TotalEnergies, Acwa Power of Saudi Arabia and Abu Dhabi-based Masdar Company, for instance, have been awarded solar power projects.

Iraqi government officials said this week that Iraq is pushing ahead with a project to build LNG-import facilities in the southern oil hub of Basra, an indication that Baghdad may be reviving this three-year-old concept.

Experts say that Iraq can probably afford to halt Iranian gas imports as local projects awarded to international companies bring more domestic gas to market.

Iraq’s gas reserves remain largely untapped because of underinvestment, conflict and sanctions.