Iraq is one of the world’s most important oil producers, but its domestic energy system is defined by a harder problem: turning resource wealth into reliable electricity. The country has large oil and gas resources, strong solar potential and a central position in Middle Eastern energy politics. Yet Iraq still faces power shortages, fuel import pressure, gas flaring, weak grid infrastructure and high summer electricity demand. The main Iraq energy story is not a simple fossil fuel story. It is a story about an oil-exporting country that still needs more gas processing, stronger transmission networks, better fuel security and faster investment in solar power and other alternatives. The IEA describes Iraq as holding abundant oil and gas resources and strong solar PV potential.
Iraq’s Defining Energy Story: Oil-Rich but Power-Constrained
Iraq’s energy system has two very different faces. Internationally, Iraq is a major crude oil exporter with enormous importance to global oil supply. Domestically, the country struggles to provide enough electricity during peak demand, especially in the hot summer months when air conditioning demand rises sharply. This creates a sharp contrast: Iraq earns major revenue from oil, but still burns oil products in power plants and depends on imported gas to keep electricity generation running.
The EIA estimates that nearly all of Iraq’s electricity generation comes from oil and natural gas, while hydropower and solar provide only small shares. In 2024, Federal Iraq’s available peak electricity generation supply was estimated at about 25 GW, far below the 48 GW needed to meet peak summer demand. The same EIA analysis points to weak transmission and distribution infrastructure, inefficient or damaged power plants, insufficient natural gas supply and electricity theft as major causes of the gap.
That is why Iraq’s energy future depends on more than new power plants. It depends on gas capture, grid repair, regional interconnections, solar development, and better use of oil revenue.
Oil in Iraq: The Export Engine of the Economy
Oil is the center of Iraq’s energy economy. Crude exports support government revenue, foreign exchange earnings, public spending and the wider political economy. Iraq’s most important producing and export infrastructure is concentrated in the south, especially around Basra and the Persian Gulf. This makes southern oil terminals, pipelines, storage systems and offshore loading points critical pieces of national infrastructure.
Iraq’s seaborne crude oil exports averaged more than 3.2 million barrels per day in 2024. Asia was the main destination, with India, China and South Korea leading regional demand. China and India together imported a large share of Iraqi crude, making Asia central to Iraq’s export strategy.
Oil infrastructure is also a bottleneck. The EIA notes that Iraq’s southern export system around Basra remains constrained and needs further investment. Sealine 3 is planned to add 500,000 barrels per day of export capacity and connect a new single mooring point to the Basra Oil Terminal, while Sealines 4 and 5 are intended to replace older pipelines and raise southern crude export capacity further.
For Iraq, oil is not only a fuel. It is the fiscal base of the state. But this also creates risk. When oil prices fall, government budgets come under pressure. When export infrastructure is blocked or delayed, national revenue suffers. When domestic power plants burn crude oil or fuel oil because gas is unavailable, Iraq uses valuable exportable resources to cover electricity shortages.
Natural Gas in Iraq: The Missing Link in the Power System
Natural gas is Iraq’s most important domestic energy problem. Much of Iraq’s gas is associated gas, which comes up with crude oil production. In a stronger system, that gas would be captured, processed and used in power plants or industry. In Iraq, limited processing infrastructure has led to high levels of flaring and a continued need for imported gas.
The EIA says Iraq delayed its target to eliminate natural gas flaring to 2028. It also notes that better investment in flared gas capture could increase the share of electricity generated from domestic natural gas, especially during peak summer demand, and reduce imports from Iran. Iraq is working on associated gas projects and non-associated gas fields such as Akkas and Mansuriya, but these projects have faced delays linked to security, investment conditions, contract terms and partner commitment.
This is why the Gas Growth Integrated Project, or GGIP, matters. TotalEnergies describes the project as a four-part investment in gas, oil, solar power and seawater treatment in the Basra region. The project includes recovering flared gas from oil fields to supply power plants, redeveloping Ratawi oil production, building a solar power plant, and developing water infrastructure for oil operations.
Gas is also a geopolitical issue. Iraq has imported gas from Iran to supply power plants near Baghdad and Basra. Reuters reported in 2025 that Iraq was receiving up to 50 million cubic meters of gas per day from Iran under a five-year deal and paying around $4 billion to $5 billion per year for gas imports. Iraqi officials also said that losing Iranian gas could cut daily electricity output by about one-third.
Coal in Iraq: A Minor Fuel in an Oil-and-Gas Energy System
Coal is not a defining part of Iraq’s energy system. Unlike countries where coal supports power generation, mining employment or heavy industrial electricity, Iraq’s fossil fuel story is overwhelmingly about oil and natural gas. The EIA estimates that about 99% of Iraq’s electricity generation comes from oil and natural gas, with only small amounts from hydropower and solar.
That makes Iraq different from coal-heavy economies such as China, India, South Africa or Poland. Iraq does not face a major coal phaseout challenge in its power sector. It faces a gas capture challenge, an oil burn challenge and a grid reliability challenge.
Coal can still appear in small industrial or imported-fuel contexts, but it does not shape Iraq’s national electricity strategy. For SEO purposes, the main point is clear: Iraq coal use is minor compared with Iraq oil, Iraq natural gas and Iraq electricity generation.
Electricity Infrastructure in Iraq: The Grid Behind the Crisis
Iraq’s electricity problem is not only about generation capacity. It is also about infrastructure. Power plants need fuel, transmission lines need to move electricity across long distances, and distribution networks need to deliver power to homes and businesses. Weakness in any one of those steps can create shortages.
The EIA reports that Federal Iraq generated an estimated 150 TWh of electricity in 2023, up from 134 TWh in 2022, showing that electricity output has grown. But the system still cannot meet peak demand. The same EIA profile says Iraq plans to add 15 GW of new generation capacity and improve the efficiency of existing power plants and infrastructure.
The main difficulty is that Iraq often has capacity on paper that cannot be fully used in practice. Plants may lack gas. Transmission and distribution systems may be damaged or overloaded. Grid losses, subsidies and illegal connections can increase stress on the system. During shortages, households and businesses often turn to private diesel generators, which are costly and polluting but provide backup when the grid fails.
Iraq also burns crude oil and fuel oil directly in power plants when natural gas is not available. The EIA reports that Iraq’s power stations burned an average of about 200,000 barrels per day of crude oil in 2023 because of insufficient gas-fired generation.
Nuclear Energy in Iraq: Interest, but No Operating Reactors
Iraq does not currently operate nuclear power plants. However, nuclear energy has returned as a policy discussion because Iraq needs reliable baseload power, desalination options and lower-emission electricity sources. The nuclear question in Iraq is still at an early planning and institutional stage, not a construction stage.
The IAEA reported in March 2024 that Director General Rafael Mariano Grossi met Iraqi Prime Minister Mohammed Shia’ Al Sudani in Baghdad, with discussions centered on Iraq’s plans for a possible nuclear energy program, including small modular reactors, while maintaining non-proliferation standards.
World Nuclear Association notes that Iraq produced no nuclear electricity in 2023 and that its power generation was dominated by natural gas and oil, with a small hydro contribution. It also says Iraq had discussed possible reactor plans in 2021 and that the 2024 IAEA visit included small modular reactors for power generation and desalination.
For Iraq, nuclear power would face serious barriers: cost, regulation, public trust, security, technical capacity, grid readiness and long project timelines. Small modular reactors may be easier to discuss than large conventional reactors, but Iraq would still need a strong regulator, workforce training, safety systems, financing and long-term political stability before nuclear power could become part of the actual electricity mix.
Renewable Energy in Iraq: Solar Potential Starts Moving Into Projects
Renewable energy in Iraq is mainly a solar story. The country has strong solar resources, high electricity demand and large areas where utility-scale solar could support the grid. Solar power is especially attractive because Iraq’s electricity demand often rises with heat, and solar output can help during daytime cooling demand.
The IEA says Iraq has strong solar PV potential and that the government expects renewable capacity to account for 5% of total system capacity by 2030. The EIA says solar generation is currently an insignificant share of total power generation, but Iraq plans to develop 7.5 GW of utility-scale solar projects to reduce gas and electricity imports from Iran.
The most important project is tied to the GGIP. TotalEnergies says the project includes a 1 GW solar power plant near the gas treatment plant in the Basra region. The plant is expected to be divided into four units to match local grid capacity and supply electricity to about 350,000 homes.
Hydropower exists in Iraq but plays a much smaller role than oil and gas. Its long-term potential is limited by water availability, upstream river management, drought risk and competition for water between agriculture, cities and energy infrastructure. Wind and biomass are less central to the national energy story than solar.
Geography, Water and the Basra Energy Corridor
Iraq’s geography shapes its energy system. The south holds the core of the oil economy, especially around Basra. This region connects oil fields, export terminals, associated gas projects, seawater treatment, solar development and power demand. It is the heart of Iraq’s energy infrastructure.
Water is a major energy issue. Oil production in southern Iraq often requires water injection to maintain reservoir pressure. At the same time, Iraq faces pressure on rivers, agriculture and urban water supply. The GGIP includes a seawater treatment plant designed to support oil field operations, showing how oil production, water infrastructure and energy security are linked in the south.
The north has its own energy politics. The Iraq-Türkiye Pipeline has been central to northern crude exports, but exports through Ceyhan were halted after March 2023. The EIA notes that northern seaborne oil exports through Ceyhan had averaged more than 400,000 barrels per day before the closure.
This means Iraq has several energy geographies at once: southern oil export infrastructure, central power demand around Baghdad, northern pipeline politics, and regional electricity links with Iran, Türkiye, Jordan, the Gulf states and Saudi Arabia.
Energy Security in Iraq: Import Dependence Inside an Export Economy
Iraq’s energy security problem is unusual. It exports large volumes of oil, but still depends on imported gas and electricity support to stabilize domestic power supply. This makes Iraq vulnerable to fuel disruptions, sanctions policy, payment issues and regional politics.
Reuters reported in 2025 that Iraq had no immediate alternative to Iranian energy imports after the United States rescinded a waiver allowing payments for electricity from Iran. Iraqi energy officials said this would create a significant problem for meeting domestic electricity demand, especially in summer.
Iraq is trying to diversify. Reuters reported that Baghdad was looking to Qatar and Oman as possible gas suppliers and planned a floating LNG terminal at Khor al-Zubair, with capacity of at least 500 million cubic feet per day, equal to about one-third of Iran’s supply at the time.
Electricity interconnections are another part of the strategy. The EIA notes that Iraq has projects or links with the Gulf Cooperation Council, Saudi Arabia, Türkiye and Jordan. Iraq began importing electricity through new transmission links with Türkiye and Jordan in 2024, while planned GCC and Saudi links could add more flexibility.
Energy Policy and the Investment Challenge
Iraq’s energy policy has to balance four goals: protect oil revenue, reduce gas flaring, improve electricity reliability and expand cleaner energy. The challenge is that each goal requires large investment and stronger coordination between ministries, state companies, foreign partners and regional authorities.
Gas capture is the most urgent reform because it touches everything else. Captured gas can reduce flaring, supply power plants, lower dependence on Iran, reduce crude oil burn in power generation and improve summer electricity reliability. Solar power can help, but solar alone cannot fix fuel shortages, grid losses or evening peak demand without storage and grid upgrades.
Foreign investment remains important. The GGIP is a major example because it combines oil redevelopment, gas capture, solar power and water infrastructure in one package. But Iraq’s broader investment environment still faces risks from politics, contract disputes, security concerns and public pressure over electricity shortages.
The Future of Energy in Iraq
The future of energy in Iraq will depend on whether the country can turn oil wealth into a stronger domestic power system. Oil will remain the export engine. Natural gas will be the key to reducing power shortages. Solar power will grow from a small base, especially if utility-scale projects connect successfully to the grid. Nuclear energy may remain part of long-term planning, but it is not yet close to becoming a major source of electricity.
Iraq’s central energy question is simple: can the country capture more of its own gas, modernize its grid and add cleaner power fast enough to meet rising demand? If it can, Iraq will be more than a major oil exporter. It will become a more secure and balanced energy economy.
