Iraq has struggled to maintain a sufficient power grid for decades. The Gulf War damaged Iraqi infrastructure and wiped out 75% of the electricity supply, according to ScienceDirect. Production faltered again after the ousting of Saddam Hussein during the U.S.-led invasion of 2003. Prior to the war, Iraq’s energy production and infrastructure faced strain from sanctions and ongoing conflict but still nearly met demand. At the time, demand ranged between 3,000 and 6,500 megawatts, while production averaged about 4,400 megawatts, according to The Washington Post. 

Rising Consumption and Dependence on Imports

Over the course of the summer, as temperatures swelled to a scorching 122 degrees Fahrenheit, Iraq’s electricity consumption peaked at about 55,000 megawatts, with the Deputy Minister of Electricity Adel Karim stating that the country is currently only generating up to 28,000 megawatts; 8,000 of which come from the natural gas imported from Iran, according to Al Jazeera. In August 2025, Iraq suffered a nationwide power outage for about a day, with subsequently shorter blackouts taking place almost daily, according to CNBC. 

While Iraq is currently the second largest producer of oil in OPEC and houses the fifth largest oil reserves globally, the nation still relies on imports of gas from Iran. Overall, these imports maintain between one-third to 40% of Iraq’s gas and power supply. 

Declining Supply and Infrastructure Challenges

Back in March of 2024, Reuters reported the two nations had signed a five-year deal which would supply Iraq with up to 50 million cubic meters of gas per day. However, exports never reached this ceiling, instead lingering around an average of 25 million cubic meters—the same rate dispersed prior to the deal, which by late November of 2024, had decreased to 7 million cubic meters. 

Iran had diverted the gas for domestic use, coming to this conclusion on the basis of diminished reserves, which had led to widespread blackouts, compounded by a higher demand for heating. Continuing this spiral, earlier in 2025, Iranian gas exports to Iraq dipped by nearly 40%. While Iraq does harbor massive gas reserves of its own, much of it is lost in oil production due to gas flares.

Furthermore, due to deteriorated infrastructure and energy theft, more than 40% of electricity generated by Iraq’s power plants is lost during transmission. This is on top of the fact that these facilities only have the ability to operate at 60% capacity due to overheating, water shortages and inadequate fuel mixes. 

Political Pressures and Blocked Alternatives

The United States (U.S.) announced that it would terminate a waiver on sanctions that had previously allowed Iraq to purchase Iranian electricity, effectively jeopardizing around 3% of Iraq’s power supply. The U.S. made this decision to increase pressure on Tehran amid ongoing nuclear negotiations, according to Al Jazeera.

On September 19th, the U.S. shot down a proposed trade deal between Iraq and Turkmenistan. The agreement would have allowed Iraq to diversify its gas supply by importing 5 billion cubic meters of gas from Turkmenistan; however, the fuel would have to be routed through Iran and the process facilitated by the state-owned National Iranian Gas Company. Through this deal, Iran would have been granted 23% of the daily volume passing through its borders. Therefore, the U.S. saw fit to scuttle the arrangement as nuclear talks with Iran continue, according to Reuters. 

Improving Infrastructure

According to Al-Jazeera, Iraq is currently constructing, seeking approval or negotiating for a series of industrial-scale solar power plants which, combined, will generate up to 12.5 gigawatts, potentially supplying 20% of the nation’s demand. 

The first of which, housed in Karbala, could produce up to 300 megawatts. Another plant under construction in Babil province is set to produce 225 megawatts, and soon to break ground, estimates suggest that a site in the Basra province could generate one gigawatt. In addition, the French oil conglomerate TotalEnergies, in conjunction with several other corporations, has enacted the second phase of development at the Ratawi oilfield.

ENKA, a Turkish construction company, has been commissioned to build the oil and gas processing complex, which could result in a daily output of 210,000 barrels of oil as well as 163 million standard cubic feet of gas.  

Hyundai Engineering and Construction plans to complete a seawater treatment facility that will allow Iraq to reduce its reliance on freshwater for processing.

The Chinese firm Petroleum Engineering and Construction Corp. will also build a separate gas processing plant expected to produce up to 600 million standard cubic feet per day. The entire multi-faceted project will cost the French oil giant a total of $27 billion.

Looking Ahead

While certain deals that would have alleviated dependency and demand may have faltered due to political pressure, Iraq’s dedication to improving its energy infrastructure remains.

– Owen Armentrout

Owen is based in Detroit, MI, USA and focuses on Business and Politics for The Borgen Project.

Photo: Flickr