Iraq is on the verge of finalising a liquefied natural gas (LNG) supply deal with Algeria, with an official announcement anticipated within two months, sources told energy platform Taqa.
The agreement, set to provide one million tonnes of LNG annually under a medium-term contract, comes as Baghdad scrambles to replace Iranian gas supplies following intensified US sanctions.
LNG imports will commence once Iraq completes infrastructure upgrades at the Khor Al-Zubair port in Basra.
The development plan includes the installation of a floating storage and regasification unit (FSRU) and a 40-kilometre pipeline connecting it to the national grid. These measures are expected to be completed within five months, potentially stabilising Iraq’s electricity sector by the summer of 2025.
The urgency to secure new gas sources increased after Iranian exports, which previously supplied Iraq with 50 million cubic metres per day, halted in early December due to rising domestic demand amid a severe winter.
The situation deteriorated further following Washington’s decision on March 9 to revoke a sanctions waiver that had allowed Iraq to purchase Iranian gas.
However, conflicting reports have emerged. Farhad Alaaeldin, foreign affairs adviser to the Iraqi prime minister, told Reuters last week that Washington had not revoked Iraq’s waiver for importing Iranian gas but had instead cancelled the exemption for importing Iranian-generated electricity. He highlighted that 43 per cent of Iraq’s power relies on Iranian gas, making diversification a significant challenge.
Beyond the Algeria deal, Iraq is also negotiating with Qatar and working to double electricity imports from Türkiye.
Additionally, in October, Iraq signed an agreement with Turkmenistan for up to 20 million cubic metres of gas per day, which is expected to meet half of the country’s power plant needs.
Last month, Deputy Oil Minister for Gas Affairs Izzat Saber reaffirmed Iraq’s commitment to ending gas flaring by 2030, aiming for long-term energy self-sufficiency.
However, in the immediate future, Iraq remains dependent on imports to fuel its gas-fired power plants, which generate about 60 per cent of the nation’s electricity.
