Iraq has ‘enormous potential’ in energy sector: US official

ERBIL, Kurdistan Region - Iraq has “enormous potential” to maximize its energy output by developing its energy sector towards complete independence, a US official has told Rudaw, adding that Washington looks forward to a stronger energy economy from Baghdad.

“Iraq is an energy superpower. It is a country with enormous potential to do much better both in terms of extraction, but also as you referred to - building a cleaner energy industry,” Geoffrey Pyatt, Assistant US Secretary of State for Energy Resources, told Rudaw on Monday in Washington. 

“It is not our place to put pressure on the federal Iraqi government, but we want the same thing that Iraq wants, to see the Iraqi energy economy moving forward,” he added. 

Earlier this month, Iraqi Oil Minister Hayyan Abdul Ghani traveled to the United States to present investment opportunities for Western companies in Iraqi gas blocks. He was also part of the Iraqi prime minister’s delegation to Washington in April that signed 19 memoranda of understanding with American companies in various fields, including energy, gas capture for electricity generation, and healthcare. 

“The visit was a follow-up to the very successful visit earlier this year by Prime Minister Sudani,”  Pyatt said, referring to Hayyan’s visit. “The central role in these conversations was for energy issues and in particular the Iraqi prime minister’s target for having full energy independence by 2030.”

He said that Hayyan was “quite eloquent” when talking about the Iraqi government’s goal of complete energy independence by 2030, adding that he is hopeful that Washington soon will not have to issue waivers for Iraq to buy gas from Iran.

“I hope we won’t have to do these waivers very soon, because the day when we won’t have to do these waivers is the day when Iraq will have achieved its energy independence and will no longer be depending on Iran for energy supplies,” he said. 

Washington has repeatedly renewed four-month wavers to help Baghdad bypass existing US sanctions on Iranian exports. Iraq is heavily dependent on gas imports from neighboring Iran to prop up its electricity production. The waivers are intended to act as a short-term stopgap until Iraq can wean itself off of Iran for its energy needs. 

“We have been clear from the beginning that the waiver was never meant to be a permanent state of affairs,” Pyatt stated. 

Pyatt visited Baghdad and Erbil in May. He said the trip had a “strong focus” on American support for Iraq’s energy independence. He also discussed closer energy ties between the Kurdistan Regional Government (KRG) and federal Iraq in addition to the necessity of reopening the Iraq-Turkey pipeline (ITP). 

Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been halted since March 2023 after a Paris-based arbitration court ruled in favor of Baghdad against Ankara, saying the latter had breached a 1973 pipeline agreement by allowing Erbil to begin independent oil exports in 2014.

“We believe the ITP needs to be restored to operation. We believe that doing so is a particular priority,” Pyatt said. 

He also expressed concern about oil smuggling in the KRG as an alternative to the ITP. 

“Right now, crude oil production in KRG is practically up to the level it was before the pipeline was suspended,” he said. “All of that oil is going somewhere, a lot of it is being smuggled, it is going in trucks that exact toll on the highways of the KRG region, it is going out through the backdoor in a way that does not benefit either the budget in Erbil or federal Iraq”

“We are very concerned about this because we consider the status quo unsustainable,” he said, stressing that the restoration of the ITP also serves as a confidence builder for Western companies to invest in Iraq’s oil and gas sector. 

Interview by Diyar Kurda

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