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Iraq Expected to Achieve Gas Self-Sufficiency in Coming Years

Iraq spends approximately $25 billion annually on primary energy subsidies, with around $6 billion of that going towards importing Iranian gas (AFP)
Iraq spends approximately $25 billion annually on primary energy subsidies, with around $6 billion of that going towards importing Iranian gas (AFP)
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Iraq Expected to Achieve Gas Self-Sufficiency in Coming Years

Iraq spends approximately $25 billion annually on primary energy subsidies, with around $6 billion of that going towards importing Iranian gas (AFP)
Iraq spends approximately $25 billion annually on primary energy subsidies, with around $6 billion of that going towards importing Iranian gas (AFP)

Iraq has inked a fresh agreement with Iran to import gas for electricity generation, sparking criticism over its economic vulnerability. However, officials believe Iraq could eventually produce enough oil and gas domestically.

The deal keeps Iraq among the top spenders globally on energy subsidies, with $25 billion spent yearly, including $6 billion on Iranian gas.

The Ministry of Electricity announced Minister Ziyad Ali Fadel’s signing of a five-year contract with Iran for gas supply, aiming to meet electricity demand.

Gas imports from Iran began eight years ago, but delays often disrupt supply during summers, causing energy production to drop and sparking public protests.

Iraq imports gas through pipelines from Iran, mainly to power stations across the country.

The deal aims to sustain electricity production until Iraq’s own gas fields are fully operational.

Iraq faces challenges repaying its $11 billion debt for Iranian gas imports due to US sanctions against Iran. The US has granted Baghdad exemptions in the past, with the latest in March.

Iraq’s repayment of its debts to Iran relies on Tehran nominating companies to buy refined products from Iraqi refineries.

This workaround is due to US sanctions preventing direct sales to Iran, explains Nabil Al-Mirsoumi, an economics professor at the University of Basra.

Asim Jihad, spokesman for Iraq’s Oil Ministry, revealed that the recent 50-million-cubic-meter gas contract with Iran covers about 40% of Iraq's gas needs.

Jihad added that Iraq currently produces 1.5 billion standard cubic feet of gas, meeting 60% of its requirements.

Jihad defended Iraq’s gas production, stating it’s mainly associated with oil extraction and could increase with higher oil output.

Importing gas from Iran benefits Iraq due to proximity and lower transportation costs, Jihad noted.

Iraq aims for gas self-sufficiency soon, with recent oil ministry contracts and initiatives to utilize gas from oil fields for electricity generation.

In February 2023, Prime Minister Mohammed Al-Sudani announced his aim for gas self-sufficiency within three years.

Additionally, Iraq’s Oil Ministry signed agreements with Siemens Energy and Schlumberger to stop gas flaring from oil fields and use it for electricity.

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Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
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Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)

Saudi Arabia’s non-oil exports soared to a two-year high in May, reaching SAR 28.89 billion (USD 7.70 billion), marking an 8.2% year-on-year increase compared to May 2023.

On a monthly basis, non-oil exports surged by 26.93% from April.

This growth contributed to Saudi Arabia’s trade surplus, which recorded a year-on-year increase of 12.8%, reaching SAR 34.5 billion (USD 9.1 billion) in May, following 18 months of decline.

The enhancement of the non-oil private sector remains a key focus for Saudi Arabia as it continues its efforts to diversify its economy and reduce reliance on oil revenues.

In 2023, non-oil activities in Saudi Arabia contributed 50% to the country’s real GDP, the highest level ever recorded, according to the Ministry of Economy and Planning’s analysis of data from the General Authority for Statistics.

Saudi Finance Minister Mohammed Al-Jadaan emphasized at the “Future Investment Initiative” in October that the Kingdom is now prioritizing the development of the non-oil sector over GDP figures, in line with its Vision 2030 economic diversification plan.

A report by Moody’s highlighted Saudi Arabia’s extensive efforts to transform its economic structure, reduce dependency on oil, and boost non-oil sectors such as industry, tourism, and real estate.

The Saudi General Authority for Statistics’ monthly report on international trade noted a 5.8% growth in merchandise exports in May compared to the same period last year, driven by a 4.9% increase in oil exports, which totaled SAR 75.9 billion in May 2024.

The change reflects movements in global oil prices, while production levels remained steady at under 9 million barrels per day since the OPEC+ alliance began a voluntary reduction in crude supply to maintain prices. Production is set to gradually increase starting in early October.

On a monthly basis, merchandise exports rose by 3.3% from April to May, supported by a 26.9% increase in non-oil exports. This rise was bolstered by a surge in re-exports, which reached SAR 10.2 billion, the highest level for this category since 2017.

The share of oil exports in total exports declined to 72.4% in May from 73% in the same month last year.

Moreover, the value of re-exported goods increased by 33.9% during the same period.