Article Title

Iraq’s energy sector is undergoing a transformative phase in 2025, driven by sweeping reforms and a strategic realignment of global energy partnerships. As the country seeks to leverage its vast oil and gas reserves to address chronic energy shortages and geopolitical vulnerabilities, it has become a focal point for major international oil companies. The return of U.S. firms like Chevron, Schlumberger, and Baker Hughes, alongside partnerships with TotalEnergies, QatarEnergy, and others, underscores Iraq’s potential to reshape the Middle East’s energy landscape. However, the path to long-term investment success hinges on mitigating geopolitical risks and navigating structural inefficiencies that have long hindered progress.

U.S. Re-entry and Geopolitical Power Plays

The U.S. has reasserted its influence in Iraq’s energy sector through high-profile investments, signaling a direct counter to Chinese and Russian expansion. A $27 billion trilateral agreement with TotalEnergies and QatarEnergy to develop the Ratawi oil field and capture flared gas for power generation exemplifies this strategy [1]. Similarly, Schlumberger’s involvement in the Akkas gas field—a project aimed at reducing flaring and boosting domestic gas supply—highlights the U.S. focus on both energy security and environmental sustainability [2]. These moves align with broader U.S. objectives to stabilize the region and counter Iranian influence, particularly as Baghdad seeks to reduce reliance on Iranian gas imports [3].

Key Projects and Production Goals

Iraq’s Gas Growth Integrated Project (GGIP) and Akkas gas field development are central to its energy modernization. The GGIP, led by TotalEnergies and supported by Chinese and Qatari partners, aims to process 50 million cubic feet of flared gas daily for power generation [4]. Meanwhile, the Akkas field, Iraq’s largest non-associated gas reserve, is expected to significantly increase gas output, with U.S. oil services firms playing a critical role in its development [5]. These projects are part of a broader government goal to achieve gas self-sufficiency by 2030 and transition from an oil-dependent economy [6].

Structural Reforms and Power Sector Challenges

Despite its resource wealth, Iraq’s energy sector has been plagued by inefficiencies, including a subsidized electricity system that generates only 10% of operating costs [7]. To address this, the government has initiated tariff reforms and partnered with GE Vernova to build 24,000 MW of combined cycle power plants [8]. Additionally, a 1 GW solar power plant in Basra, backed by TotalEnergies, aims to diversify energy sources and reduce reliance on flared gas [9]. These reforms are critical to attracting sustained investment, though challenges such as corruption and inconsistent enforcement of regulations persist [10].

FDI Inflows and Regulatory Reforms

Foreign direct investment (FDI) in Iraq’s energy sector has surged, with $100 billion in commitments over two years, driven by projects like the Ratawi and Akkas developments [11]. BP’s $25 billion Kirkuk redevelopment and Excelerate Energy’s LNG import plans further illustrate the sector’s appeal [12]. Regulatory reforms, including streamlined investment processes and a newly established Fund for Development, aim to improve transparency and investor confidence [13]. However, the Kurdistan Regional Government’s (KRG) semi-autonomous status—allowing 100% foreign ownership—creates jurisdictional complexities, particularly in oil revenue distribution disputes with Baghdad [14].

Geopolitical and Security Risks

Security remains a critical concern, with Iranian-backed militias targeting energy infrastructure in the KRG, including U.S.-operated sites [15]. The government has responded by strengthening security partnerships with international firms and enhancing infrastructure protection. Nonetheless, internal political divisions and regional tensions pose ongoing risks to project timelines and returns [16].

Mitigating Risks Through Partnerships

To reduce geopolitical exposure, Iraq has diversified its energy partnerships, balancing U.S., Chinese, and Qatari investments. The 2025 Iraq Energy Conference emphasized innovation and sustainability, aligning with global climate commitments [17]. Additionally, OPEC+ collaboration aims to stabilize oil production and pricing, providing fiscal predictability for investors [18].

Long-Term Investment Potential

While risks persist, Iraq’s strategic location, untapped reserves, and reform agenda position it as a high-reward market. Projects like GGIP and Akkas could unlock $150 billion in value by 2030, assuming stable political conditions and continued foreign participation [19]. For investors, the key lies in hedging against geopolitical volatility while capitalizing on Iraq’s pivot toward energy self-sufficiency.

Source:
[1] Redefining and Strengthening the U.S.-Iraq Relationship through Energy and Security [https://www.washingtoninstitute.org/policy-analysis/redefining-and-strengthening-us-iraq-relationship-through-energy-and-security]
[2] Iraq, Schlumberger Sign Deal To Develop Akkas Gas Field [https://autotechinsight.spglobal.com/news-filter/10001/asean]
[3] U.S. Return to Iraqi Oilfields: Geopolitical Power Play [https://discoveryalert.com.au/news/geopolitical-chessboard-iraq-energy-superpower-2025/]
[4] Enabling Iraq's Energy Independence [https://pemedianetwork.com/petroleum-economist/articles/gas-lng/2024/enabling-iraq-s-energy-independence/]
[5] Iraq Energy Conference 2025 [https://iraqdp.com/registration/3]
[6] Iraq: Country File, Economic Risk Analysis [https://www.coface.us/news-economy-and-business-insights/economic-risk-dashboard2/country-risk-files/iraq]
[7] Iraq's Electricity Shortage and the Paradox of Gas Flaring [https://www.bakerinstitute.org/research/iraqs-electricity-shortage-and-paradox-gas-flaring]
[8] Iraq: energy and security [https://www.atalayar.com/en/articulo/politics/iraq-energy-and-security/20250703100000216425.html]
[9] Unlocking the Promise of Iraq's Oil Sector [https://gulfif.org/unlocking-the-promise-of-iraqs-oil-sector/]
[10] 2024 Investment Climate Statements: Iraq [https://2021-2025.state.gov/reports/2024-investment-climate-statements/iraq/]
[11] Iraq: Country File, Economic Risk Analysis [https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/iraq]
[12] Iraq Energy Profile: Second-Highest OPEC Oil Producer [https://www.eurasiareview.com/21072025-iraq-energy-profile-second-highest-opec-oil-producer-analysis/]
[13] Iraq’s USD 100 billion gamble: Can dreams survive oil price decline and fiscal strain? [https://internationalfinance.com/oil-and-gas/iraqs-usd-billion-gamble-can-dreams-survive-oil-price-decline-fiscal-strain/]
[14] 2024 Investment Climate Statements: Iraq [https://2021-2025.state.gov/reports/2024-investment-climate-statements/iraq/]
[15] Deterring Future Drone Attacks on U.S. Energy Interests in Iraq [https://www.realclearenergy.org/articles/2025/07/17/deterring_future_drone_attacks_on_us_energy_interests_in_iraq_1123347.html]
[16] Iraq: Risk Assessment - globalEDGE - Michigan State University [https://globaledge.msu.edu/countries/iraq/risk]
[17] Iraq Energy Conference 2025 [https://iraqdp.com/registration/3]
[18] Iraq: Country File, Economic Risk Analysis [https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/iraq]
[19] Iraq: energy and security [https://www.atalayar.com/en/articulo/politics/iraq-energy-and-security/20250703100000216425.html]