Iraq faces a potential energy crisis as US President Donald Trump ends its exemption from sanctions on Iranian gas and electricity imports.

The executive order aims to prevent Iraq from using the US financial system to facilitate Iranian sanctions evasion and ensure Gulf countries do not serve as transit points for Iranian energy exports. The measures are part of a broader effort to reduce Iran's oil exports to zero, including shipments to China, as part of the recently reinstated "maximum pressure" campaign. Iraq has been bracing for this for some months and as part of the preparations for a total lockdown of its eastern border, it has rushed to sign contracts and deals with several companies and countries in recent weeks and months. 

"The lack of diversification in Iraq's gas sources, despite the ongoing crisis surrounding Iranian gas imports," is a key concern, said Bassem Naghimash, a member of the Iraqi Parliament's Oil and Gas Committee.

He noted that while alternatives, including Jordan, Turkmenistan and Qatar, have been proposed, "the country's capacity to invest in domestic gas solutions has been hindered by a lack of government financial and logistical support."

Committee member Kazem Al-Touki explained that Qatar was considered as a potential supplier, but infrastructure limitations proved challenging. "US sanctions also thwarted this deal, as the intermediary company is Iranian-owned," he said, adding that ministers would be hosted to discuss solutions.

Al-Touki said that the “real issue lies not only in sanctions against Iran but also in the broader impact on Iraq.” He confirmed that the ministers of electricity and oil would be hosted to discuss potential solutions following Trump’s decision, Shafaq reported.

"Iraq's electrical grid relies on Iranian gas for about 40% of its supply, amounting to approximately 8,000 MW of power," said economic expert Nabil Al-Marsoumi, warning of severe consequences if sanctions take effect.

Iranian economic expert Saeed Shavardi argued the gas trade is essential for Iraq's electricity generation, warning that "the final decision rests with the Iraqi government, which will face significant pressure from the United States."

For long-term solutions, Al-Marsoumi suggested building LNG import infrastructure at Al-Faw port and developing solar projects. He estimated that "these projects could add up to 3,000 MW to Iraq's electricity grid within three years."

He noted that "Turkmenistan could supply Iraq with around 4,000 MW of electricity, but this would only partially address the country's needs."

Iraq has been working on regional electricity interconnection projects and signed an agreement with Turkmenistan in August 2023 to import gas.

The electricity minister confirmed that Turkmenistan imports would reduce reliance on Iranian gas by 50%, though domestic gas development projects would take 3-5 years to complete.

As part of its “move quick plan,” France's TotalEnergies signed an agreement with Basra Investment Commission to construct a 1,000-MW solar power plant in Iraq, the commission announced on February 4.

TotalEnergies, on its website, stated: "In Iraq, we are developing a 1-GW solar power plant to supply the electricity grid in the Basra region."

The $820mn project will be built in the Zubair district's Artawi area over three years (36 months) and will be implemented in four phases, Commission Director Alaa Abdul Hussein said in a statement.

"TotalEnergies is a prestigious company in this field and will implement the project using modern and advanced technologies, incorporating the latest scientific developments," Abdul Hussein added.