Iraq has taken a significant step towards enhancing its energy security by signing a contract with U.S. company Excelerate Energy for the country’s first floating liquefied natural gas (LNG) import platform. The agreement, announced by the office of the Iraqi Prime Minister on October 3, 2023, aligns with Iraq’s objectives to strengthen its gas supply and reduce its dependence on Iranian energy imports.
Under this contract, Excelerate Energy will deliver a floating storage regasification unit (FSRU) designed to receive, store, and regasify LNG. This infrastructure will be situated at the Khor Al-Zubair commodities port near Basra in southern Iraq. The deal marks a crucial milestone in Iraq’s efforts to diversify its energy sources and address ongoing power generation challenges.
Historically, Iraq has relied heavily on Iranian gas to meet its energy needs, despite being one of the largest oil producers globally. The country has faced significant issues with gas supply, leading to frequent blackouts and electricity shortages, especially during peak demand in the summer months. The use of associated gas has also been suboptimal, with high levels of flaring rather than integration into a comprehensive gas supply chain.
The initiative to develop the floating LNG import terminal gained momentum last month when Iraq issued the official award letter to Excelerate Energy. The final approvals for the project were confirmed during a meeting between Iraqi officials and company representatives on the sidelines of the UN General Assembly in New York at the end of September.
Excelerate Energy has expressed optimism about the project’s potential impact. The company stated, “The proposed terminal will enable the importation of LNG to support domestic power generation, help stabilize the national grid, and allow Iraq to diversify from unreliable natural gas supply sources.”
This agreement has garnered attention not only for its economic implications but also for its geopolitical significance. Thomas Lersten, a senior official at the U.S. Department of State, commented that the terminal development illustrates U.S. energy leadership and represents a vital step in advancing Iraq’s energy security. He emphasized the importance of reducing reliance on Iranian pipeline gas, which has historically posed risks to Iraq’s energy independence.
As Iraq moves forward with this landmark project, the implications for its energy landscape and overall economic stability remain substantial. The floating LNG import platform is expected to bolster the country’s ability to meet domestic energy demands while paving the way for a more sustainable and reliable energy future.
