Iraq to halt oil product imports after achieving self-sufficiency, PM says

Iraq will no longer import oil products such as gasoline and diesel, as the Opec member has achieved self-sufficiency through increased hydrocarbons production and the opening of new refineries, Prime Minister Mohammed Shia Al Sudani said.

Mr Al Sudani directed a halt on imports of gasoline, diesel and kerosene, according to a statement on Tuesday.

“Following significant efforts over the past three years, after operating new oil refineries as part of the self-sufficiency plan, and given that our domestic production of gasoline, diesel, and kerosene has reached levels exceeding domestic consumption, the Prime Minister has directed the cessation of imports of these products,” the statement added.

Mr Al Sudani also directed the Oil Products Distribution Company to “regulate domestic consumption and allocate the surplus for export”.

Iraq has been struggling with a power crisis for years now. Despite being Opec’s second-largest producer, Iraq is dependent on Iran for about a third of its electricity needs.

Last year, Iraq’s installed capacity stood at about 27,000 megawatts, but summer demand regularly exceeds 45,000MW. This has led to rolling blackouts during peak summer heat, when temperatures top 50°C in southern provinces.

The US's decision in March not to renew a waiver that had allowed Iraq to buy electricity from Iran, as part of US President Donald Trump's “maximum pressure” campaign against Tehran, further worsened the situation.

The shortfall was also worsened this year after Iran reduced natural gas supplies by half to meet domestic demand, cutting nearly 4,000MW from the grid in July.

Global deals

To deal with the situation, Iraq in August signed an emergency deal with Turkey’s Karpowership company to use two vessels – mobile power plants – off the coast of the southern province of Basra.

In April, the country also signed agreements with American companies, GE Vernova and UGT Renewables, to produce 27,000MW of electricity. The US embassy said the deals were worth “billions of dollars” at the time of signing, but did not give further details.

Proud to have made a real difference in Iraq, says TotalEnergies CEO

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Iraq has also signed a multibillion-dollar deal for a fully integrated energy project with TotalEnergies in the south.

The French company has been investing heavily in Iraq due to its potential, TotalEnergies chairman and chief executive Patrick Pouyanne told Sky News Arabia at Adipec on Tuesday.

"Iraq was for us a big adventure in the last three-four years. I went back to Iraq in 2020 and I'm very proud of the work of the teams because in less than five years we managed to sanction very large projects ... leveraging all our skills."

The initial request from the Iraqi government was to produce more electricity, he said, looking at sourcing it from gas or from solar.

"When you go to Basra in the south of Iraq, you see huge flares, so we are flaring too much gas. So we said, OK, let's capture all this gas, let's stop burning it. Let's clean it and let it be a feedstock for gas plants. Instead of importing, you will have your own resources," Mr Pouyanne said.

On the solar side, the company is also building today a 1 gigawatt plant, with the first phase of 300MW set to be put in production by the start of next year.

"We've done our best in the interests of Iraq ... It's a huge commitment from the company and I think we paved the way for other competitors to come."

Iraq has also signed another deal with Germany's Siemens Energy and is also working on regional electricity interconnections with Jordan and the Gulf region, and on expanding its ties with Turkey. It plans to add 7,000MW from renewable energy by 2030.

Refinery upgradation boost

Iraq's move to upgrade its refineries has helped it become self sufficient in oil products, Palash Jain, Middle East oil analyst at FGE NexantECA told The National at Adipec on Tuesday.

“Iraq mainly imports two oil products. One is gasoline, and the other one is gasoil diesel. In the past two to three years, Iraq has done quite a tremendous job in upgrading their refineries, specifically in Karbala, Basra as well as in Kirkuk.”

Iraq gasoline imports in the first half of this year have come down to about 50,000 barrels per day from nearly 100 to 120,000 bpd till last year because of upgradation of refineries, he added. Iraq imports oil products mainly from the UAE and India.

“The development will help the country to reduce import bills and support economic development.”

More countries are embarking on the refining path because of higher margins involved in the business, according to Claudio Galimberti, chief economist and global market analysis director at Rystad Energy.

“A trend for this region is to become more of a refining hub not just a crude trading hub. So with this, you can expect in the next few years, not just Iraq, but potentially other countries becoming self sufficient,” he said.

“The vertical integration allows the country to capture downstream margins, and downstream margins are significant. I am not surprised that Iraq embarked on this.”