Once billed as a 'lifeline' for a neighbour in need, Iranian oil supplies are suffocating Iraq

Flames rising from the burning of excess hydrocarbons at the Nahr Bin Omar natural gas field, north of the Basra on 22 January, 2018. [Getty]
4 min read
28 May, 2021

can be directly linked to the country’s , as electricityshortages demonstrate both the to provide essential services and the extent of Iranian influence in the country.

The situation in Iraq may soon become explosive, as the country’s Ministry of Planning indicates that this summer'ssupply of electricity is unlikely to meet demand.

Electricity production capacityis decreasing as Iran restricts oil exports, while energy demand is increasing (at a rate of 7% - 10% annually)due to population and economic expansion. Iraq has suffered from limited access to electric power since the Iraq War in 2003, which has forced Iraqis to resort to costly alternatives, such as , to live and work.

Iraqi protest

In the past week, hundreds of protesters from southern Iraq have travelled to Baghdad to demonstrate against the , reputedly by Iran-backed militias.

This activismis a continuation of an anti-government protest movement that has occupied parts of and since 2019, decrying Iraq's , in politics, Iranian support for , and the deterioration of services, including drinking water and .

Past protests have struggled against repression at the hands of and Iran-backed militias.

When protests paused in 2020 due to Covid-19, the government continued to assassinate dissenting activists and journalists. These assassinations reignited protest, which was, once again, repressed using by Iraqi authorities, paramilitaries, and militias such as the Popular Mobilization Forces and Militia Rubu Allah.

"Assassinations reignited protest, which was, once again, repressed using deadly force by Iraqi authorities, paramilitaries, and militias"

To this day, security forces confront protesters in Baghdad and southern Iraqi cities with excessive force and violence.

Iraq's overdue gas bill

Iran's creeping economic and political influence in Iraq has nurtured Iraqi dependence on .

This summer, Iran is reducingoil exports to Iraq by 90% due to overdue payments, a move bound to exacerbatean already-acute electricity shortage in Iraq.

Harry Istepanian, an energy expert based in Washington DC, said, "The electricity shortage is worsening, mainly because Iran reduced the gas supply from 50 million cubic metres to 5 milliona year ago, due to the overdue payments."

He noted that, at current levels of Iranian oil import, Iraq is producing 15,000 MW of electricity. The expert forecast severe electricity shortages this summer, when Iraq is predicted to need at least 22,000 MW.

Iraq currently owes more than $2.76bn to Iran. Iraq’s and political have prevented the repayment of debts.

Sabah Eulu, an Iraq expert, reports that Iran “blackmails” the Iraqi government, preventing it from economically opening up to neighbouring countries. Iran then uses its monopoly to sell marked-up oil to Iraq at a rateestimated to be five times the global price.

Furthermore, reportedly, Iran is attempting to keep Iraq politically and economically in its shadow by obstructinginvestment, especially in energy and gas.

The insecurity surrounding Iraq’s promising and Mansouriya fields have contributed to the retreat of most international investment companies from working and investing in Iraqi oil. Furthermore, instability around the Umm Qasr and Khor Al-Zubair ports in Basra prevents Iraq from importing oil from maritime neighbours, such as Qatar.

With reduced investment in Iraqi oil infrastructure, restricted import potential, and high electricity demand, Iraq finds itself with no other option than importing Iranian oil.

"Iran is attempting to keep Iraq politically and economically in its shadow"

Wasted natural resources

Energy experts confirm that Iraq has the ability to compete in the global market if its oil production is developed. Promising sites include the Mansouriya Field, which containsfivetrillion cubic metres of oil, and the Akkas Field, which contains 11.5 trillioncubic metres of oil.

Eulu stated that, despite Iraq’s status as eleventh in the world in terms of natural gas resources, the countrydoes not benefit from its production of natural gas. As theoil drilled in the area contains high levels of minerals such as hydrogen sulfide and sulfur, Iraqi oil needs extensive processing.

This oil needs to be processed by expensive refining stations in order to be suitable for consumption and export, however, such stations are severely underfunded. Therefore, 180 million cubic metres of Iraqi oil are burned each year to extract crude oil.

Iraq burns more than half of the natural gas that its fields produce, with the soot falling on houses near oil fields. This pollution increases the , including asthma and certain types of cancer. These effects have been especially pronounced in Basra, southern Iraq.

Despite all of the negative externalities caused by Iraq's reliance on Iranian oil, experts predict that Iraq will not be able to cut its dependence for at least five years. To do so, Iraq needsto regulate energy consumption, build more power stations and infrastructure, and develop alternative energy sources.

Sanar is an Iraqi journalist covering Baghdad with a special focus on gender, refugees, and displacement.

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