U.S. Pushes Iraq To Cut Energy Dependence On Iran

The U.S. work to have Iran’s influence on Iraq’s energy sector reduced made progress last week when Iraqi Prime Minister Mustafa Al-Kadhimi visited Washington for high-level meetings with President Donald Trump, Secretary of State Mike Pompeo, and Secretary of Energy Dan Brouillette.  The U.S. Administration’s push to reduce Iraq’s dependence on energy imports from Iran—including electricity and natural gas—could see rapprochement and closer energy cooperation between Iraq, the only Arab country in the Gulf region that is not a member of the Gulf Cooperation Council (GCC), and Iran’s archrival in the region and a key U.S. ally, Saudi Arabia.    

A top-level Iraqi delegation, led by Prime Minister Al-Kadhimi, visited Washington last week and agreed to work, with help from the United States, on connecting Iraq’s electricity grid to Saudi Arabia’s, and possibly Kuwait’s—the GCC state that Iraqi dictator Saddam Hussein invaded in 1990, triggering the Persian Gulf War. 

“We’ve been working with our Iraqi counterparts on energy- and electricity-related projects, and others, for some time,” a senior U.S. administration official said on the visit of Iraqi officials.    

“It is vital that Iraq’s electricity grid be connected to the GCC. We’ve been working on this, as I’m sure you know, and there’s more work to be done.  And so that will continue,” the official added.  

Iraq’s energy sector is dependent on imports from Iran, and even after the U.S. slapped sanctions on Iran’s energy exports, Iraq continues to import natural gas and electricity from Iran under a special waiver that the United States has regularly extended to Iraq. Major Iraqi power plants are dependent on Iranian natural gas supply, and Iraq also imports electricity from Iran, as Baghdad’s power generation is not enough to ensure domestic supply.  

The U.S. has been working for closer cooperation between Iraq and the GCC states, and has been facilitating meetings between Iraqi energy officials and officials from Saudi Arabia, the UAE, and other GCC states, The Wall Street Journal quoted Iraq’s Prime Minister Al-Kadhimi as telling reporters after his meeting with President Trump last week. 

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“The Americans also encouraged us and encouraged our neighbors to link up our electricity generation grids,” Al-Kadhimi said. 

A month before the U.S.-Iraq meetings at the White House, the U.S. State Department said in a statement on U.S./Iraq/GCC Cooperation:

“The Government of Iraq, Gulf Cooperation Council, and United States have renewed their full support for the Gulf Cooperation Council Interconnection Authority (GCCIA) project to connect the electricity grids of Iraq and the GCC. The United States is committed to facilitating this project and providing support where needed. This project will provide much-needed electricity to the people of Iraq and support Iraq’s economic development, particularly in the southern provinces.”

At the U.S.-Iraq meetings last week, “the United States and Iraq discussed the Government of Iraq’s efforts to increase domestic electricity and gas production, reduce wasteful gas flaring, and implement energy market reforms,” the State Department said, noting that the two governments plan to continue cooperation with the GCC member states and Gulf Cooperation Council Interconnection Authority on Iraq/GCC electricity connections and energy investment. 

Secretary of Energy Brouillette “emphasized the critical role U.S. private investment will continue to play in Iraq’s energy future and stressed the need for rapid progress towards energy independence from Iran,” announcing commercial agreements worth as much as US$8 billion between U.S. energy companies and the Government of Iraq. The agreements include a framework agreement between U.S. supermajor Chevron and the Iraqi Ministry of Oil for entering into exclusive negotiating on an exploration, development, and production contract in the Dhi Qar Province. In addition, General Electric and Iraq’s Ministry of Electricity committed to three agreements that will help increase reliable access to electricity in Iraq, and collaboration on strengthening Iraq’s electricity grid and interconnection with neighboring countries.

“President Trump’s Administration & the U.S. private sector stand ready to help Iraq achieve energy independence and bolster their national security,” Secretary Brouillette said. 

According to a Western official who spoke to the Journal, the Iraqi electricity grid and infrastructure will need upgrading to be able to receive electricity from GCC, and this upgrade could take more than a year.  

Closer energy cooperation between Iraq and GCC could also come in the form of Saudi investments in an Iraqi natural gas field and solar energy projects, Iraqi Deputy Prime Minister and Finance Minister, Ali Allawi, told Bloomberg in an interview last month. 

The more Iraq cooperates with GCC members, the more it could lessen its dependence on Iran in the energy sector, or at least the U.S. hopes so. 

By Tsvetana Paraskova for Oilprice.com

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