Iraq is seeking to develop 7.5 GW of renewable power, the country's oil minister said Oct. 6, as OPEC's second-biggest producer inks a 2 GW agreement with UAE's clean energy firm Masdar.
In the initial phase of the Masdar deal, 1 GW will be developed in Iraq, oil minister Ihsan Ismaael said at a press conference in Baghdad broadcast live by state TV. He did not say when phase one will be completed.
The Masdar deal will be "a long-term investment" and will be start of many more, UAE energy minister Suhail al-Mazrouei said at the press conference.
Masdar, the renewable energy arm of Abu Dhabi's sovereign wealth fund Mubadala Investment Company, has a generation capacity of about 13 GW in over 30 countries.
Iraq has been striking a number of renewable agreements to help lower its dependence on oil and gas as feedstock for power generation.
In September, Iraq signed $27 billion worth of deals with TotalEnergies that include building a 1 GW solar power plant.
Iraq and state-owned PowerChina have also signed an initial agreement to develop up to 2 GW of solar power plants, the prime minister's media office said Aug. 25, as OPEC's second-biggest producer seeks to lower its dependence on imports of Iranian electricity.
In the first phase, PowerChina will develop 750 MW, the media office said, without disclosing more details about the agreement.
Iraq is courting international oil companies to develop its gas resources to meet its power generation needs and lower dependence on Iranian gas and electricity, the minister said.
The ministry's target is to reach 4 Bcf/d of production from associated gas and another 1.5 Bcf/d from free gas by the end of 2025, Ismaael told Energy Intelligence Forum on Oct. 6.
However, Iraq's power sector needs a minimum of 7 Bcf/d as feedstock for its 40 GW of installed electricity capacity, which means that independence from Iranian gas is a long way off.
Moreover, annual energy consumption is growing 5%-7% due to the expanding population.
"Our priority is to operate all our power generation by gas and the second to use national gas not external gas," the minister said.
Iraq is under increasing pressure from the US to wean itself off electricity and gas imports from Iran, which has been subject to US sanctions since 2018.
The US administration has been granting Iraq waivers since 2018 to continue importing Iranian energy.
Iranian intermittent supply of gas and electricity has led to widespread shortages in Iraq this summer, when the temperature has soared to 50 degrees Celsius, especially in the south.
Adding to Iran's outage is the difficulty Iraq is facing in paying billions of dollars of dues to sanctions-hit Tehran, complicating Baghdad's ability to settle its arrears without the threat of financial repercussions.
Despite the intermittent supply and US pressure, Iraq's overreliance on imports of Iranian energy and delays in capturing its own flared gas for power generation, which is mainly gas-based, is unlikely to abate soon.
Iraq was the world's second-worst flaring nation after Russia in 2020, burning some 17.37 Bcm of gas last year, according to the World Bank. Iraq has been the world's second-worst gas-flaring nation since at least 2016, World Bank figures showed.
Cash-strapped and politically-hobbled Iraq has been slow to capture its associated gas, which forms the majority of its production, due to the financial crisis gripping the country and its complicated ties to Iran, which still wields power in its neighbor.
Frequent attacks on power lines and pylons blamed on a resurgent Islamic State have also exacerbated Iraq's power shortages.