Iraq is intensifying its efforts to boost investment in its gas sector, a move seen as key to driving economic growth, according to Oil Minister Hayan Abdul Ghani. Iraq’s gas reserves have significant potential to meet this goal. Official estimates put the country’s proven reserves at 3.5 trillion cubic meters (Tcm), roughly 1.5% of the world’s total, ranking it 12th globally. About 75% of these reserves are associated gas, a by-product of oil production. However, Iraq has not updated its gas reserve figures since 2010, nor has it provided reliable estimates for non-associated gas. The International Energy Agency (IEA), however, estimates that recoverable gas resources could reach as much as 8.0 Tcm, with non-associated gas accounting for around 30%.
There are three main reasons Iraq is focusing on expanding its gas sector. First, financial gains are a major motivator. For years, Iraq has been burning billions of dollars worth of gas annually through flaring, wasting valuable resources. In 2017, Iraq joined the United Nations and World Bank’s “Zero Routine Flaring” initiative, aiming to end the practice by 2030. At that time, Iraq was the second-largest flarer of gas globally, behind Russia, burning 17.8 billion cubic meters (Bcm) of gas per year. Despite some progress, Iraq’s flaring levels remain high, though a significant reduction has been seen since TotalEnergies’ US$27 billion deal in 2021, which includes a US$10 billion investment in Iraq’s “Gas Growth Integrated Project.” This initiative aims to capture and repurpose associated gas for domestic energy needs and exports, helping Iraq generate much-needed revenue.
The second reason for developing Iraq’s gas potential is to build a robust petrochemical industry, beginning with the Nebras Petrochemical Plant (NPP). To run the NPP, Iraq needs a steady supply of 28.3 million cubic meters of gas per day. This would allow ethane to be extracted, a key component for producing ethylene, a valuable product in petrochemicals. Ethane is preferable to naphtha because it generates fewer by-products. While Iraq’s gas fields can produce the required volumes of ethane, progress has been slow due to transparency issues in contracts with international oil companies. Experts estimate that developing a world-class petrochemical sector could cost between US$40 billion and US$50 billion but would yield significant long-term profits.
The third key reason for tapping into Iraq’s gas reserves is to reduce dependence on Iranian energy supplies. For years, Iraq has relied on Iranian gas and electricity, with approximately 40% of its energy needs met by Iran. Despite US sanctions on Iranian energy, Iraq has continued to import these supplies, even signing a five-year deal in 2023 to do so. This reliance has strained relations between Iraq and the United States, which has imposed sanctions on Iraqi entities involved in smuggling Iranian oil and gas. Reducing this dependence by developing Iraq’s own gas resources could ease these tensions and attract more investment from US firms.
While Western companies like TotalEnergies and BP are still active in Iraq, the country has recently turned its focus to Russia for further collaboration on its gas sector. Russia’s involvement offers synergies with its strong presence in neighboring Iran, where both countries have expanded energy cooperation. A key component of this cooperation is the exploration and development of gas reserves, with Russia and China working together on projects in both Iran and Iraq. These efforts are supported by the Gas Exporting Countries Forum (GECF), a coalition of gas-producing nations that already controls a large share of global gas production and exports. By partnering with Russia, Iraq hopes to tap into this network and increase its share of the global gas market.
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