Texas-based Excelerate Energy has signed an agreement with Iraq to supply and operate a large offshore LNG import terminal in a package valued at $450 million, the company has said.

Iraq opted for the project after a sharp fall in Iranian gas supplies for its power plants. A gas supply deal with Turkmenistan also failed to materialise.

The floating storage and regasification unit will be deployed in Khor Al-Zubair in the southern oil centre of Basra and will supply gas to the province and nearby areas, where several power facilities have been crippled due to lack of gas.

Excelerate signed the deal with prime minister Mohammed Al-Sudani at his office in the capital Baghdad on Tuesday, nearly a month after it received an award letter.

Excelerate CEO Steven Kobos said that the Iraq agreement represents the company’s first fully integrated floating LNG import terminal with supply in the Middle East.

The company said on October 3 that the installation of the terminal will be led by Excelerate in coordination with the Iraqi government and it represents an opportunity to enhance the Arab country’s energy security and infrastructure.

Sudani’s office said the integrated project includes a five-year contract for LNG supply and regasification services with an option to extend the contract. 

The terminal will initially handle 250 million standard cubic feet per day of gas, expandable to 500 million, it said in a statement.

Excelerate said it would deploy its newest regasification vessel, Hull 3407, now under construction by Hyundai Heavy Industries in South Korea. 

Operations are expected to begin in 2026 after construction and regulatory approvals are completed, it added.

Al-Sudani’s office said the floating terminal offers a “flexible option” with faster implementation and lower costs than fixed infrastructure, aiming to secure gas supplies for electricity generation and reduce reliance on imported pipeline gas.

Iraq, which controls the world’s fifth largest proven oil deposits, said this year it would purchase floating terminals to import LNG to feed its power facilities.

The decision followed a sharp decline in Iranian gas supplies, which account for nearly 40 percent of the power generation at Iraq’s gas-run power facilities.

It also came after a memorandum of understanding with Turkmenistan to import gas failed to materialise following US objection as the gas has to pass through Iran.

Iraqi officials have visited Qatar over the past months for a possible LNG supply agreement while imports from Oman were also discussed during a recent visit to the sultanate by Al-Sudani.

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