ERBIL, Kurdistan Region - Iraq’s Prime Minister Mohammed Shia’ al-Sudani on Thursday said that improving the country’s energy sector has been one of the main priorities of his cabinet, adding that the recent agreements signed with international firms will assist Iraq in ending its import of gas.
Attending the 2023 Iraq Forum in Baghdad, Sudani participated in a panel titled "Iraq’s Immediate Policy Priorities and the Challenges ahead,” answering pressing questions regarding his cabinet’s first six months in office, the development of Iraq’s energy sector, and Erbil-Baghdad relations.
“I believe the biggest problem we [government] have faced was pre-judgment from inside Iraq and outside,” said Sudani during the forum, adding “what we have achieved in the past six months have nullified those judgments."
The Iraqi premier noted that the only way to gain the people’s trust is through honesty and serious work, saying they have been able to obtain credibility for the cabinet and the Running State Coalition as they have already achieved 31 percent of the 80 Articles laid out in the ministerial curriculum as part of the government’s responsibilities.
Regardless of his cabinet’s achievements, Sudani expressed his disappointment in some of his ministers, saying he had hoped to see more activities from them, without naming any minister in particular.
Sudani, nominated by the Running State Coalition, assumed the premiership in October 2022, after a prolonged political deadlock that lasted for over a year, stemming from the main blocs of the parliament’s disagreement over the mechanisms of how to form Iraq’s next government.
The PM referred to corruption as a “dangerous challenge facing Iraq,” but stressed that “there are no red lines” and that they will not steer away from punishing the corrupt.
“Corruption is a dangerous challenge facing Iraq… We have started by reforming the anti-corruption agencies, and unfortunately we found major flaws in those agencies," PM Sudani stated about the Iraqi government's efforts against corruption.
— Rudaw English (@RudawEnglish) May 4, 2023
An investigation by the Iraqi finance ministry in October concluded that $2.5 billion in tax funds were stolen from the General Commission of Taxes’ account at Baghdad's Rafidain Bank between September 2021 and August 2022, during the tenure of former finance minister Ali Allawi.
The Iraqi government has repeatedly vowed to retrieve the stolen funds, but has so far only retrieved a small portion of the amount despite arresting the main suspect in the case over six months ago.
Sudani has previously stated that several governmental agencies were accomplices to what was named “the theft of the century,” vowing to hold all those involved accountable.
Gas and energy
Sudani also reaffirmed his commitment to bolstering the country’s energy sector, with special focus on achieving gas self-sufficiency and ending Iraq’s reliance on imported gas, while also preserving Iraq’s environment and reducing its problematic flaring of gas.
“We are burning money on a daily basis. We are burning 1.2 billion cubic meters of gas, and we import one billion cubic meters from Iran daily, which costs us no less than 4 billion dollars a year," he said.
Iraq is still one of the world’s largest gas flaring countries. The flaring process is when oil wells burn the excess gas they can't store or use, and is a convenient way to deal with the waste product known as associated petroleum gas, however the process is among the main reasons for global climate change.
The country has never been a strong global competitor in gas exports. Instead, the country has for a long time relied strongly on imports of gas, mainly from Iran, to provide electricity for people.
Iran in 2022 said it had received $1.6 billion of the money owed by Iraq in return for Tehran’s gas exports over the years.
“Iraq must be a part of the gas market, considering the amount of gas that is being flared,” PM Sudani added.
— Rudaw English (@RudawEnglish) May 4, 2023
The premier expressed optimism regarding the country’s gas ventures with key international firms, believing that the projects will help Iraq become self-sufficient in the vital resource and be a part of the global gas market.
Sudani said that Iraq will be able to produce 600 million cubic meters on a daily basis through the deal with TotalEnergies in three to five years, and that the Basra Gas Company this year will provide the country with 400 million cubic meters of gas daily, “which means in a year to three years we will bring an end to the import of gas.”
A deal signed between the Iraqi government and French TotalEnergies will see the energy giant build four projects for oil, gas, and renewables in southern Iraq in the span of 25 years. The contract was initially signed in 2021 but faced a delay due to disagreements over Iraq’s stake in the deal as Baghdad demanded a 40 percent share.
The deal with TotalEnergies was agreed upon early April and TotalEnergies will have the lion’s share with a 40 percent stake of the so-called Gas Growth Integrated Project (GGIP), followed by Iraqi state-owned Basra Oil Company with 30 percent, and QatarEnergy with 25 percent.
Basra Gas Company is an Iraqi joint venture between the government in Baghdad, Shell, and Japan’s Mitsubishi aimed at achieving energy independence.
The PM on Tuesday met with representatives of several international oil companies (IOC) working in the country, stressing the government’s desire to achieve gas self-sufficiency, also calling on the companies to expedite the implementation of the projects they have signed on to.
Erbil-Baghdad oil deal
Sudani lauded the role of Kurdistan Region President Nechirvan, Kurdistan Democratic Party (KDP) leader Masoud Barzani, and Prime Minister Masrour Barzani, in signing the deal between Erbil and Baghdad to resume the export of the Kurdistan Region’s oil after being put on halt due to a ruling from a Paris-based arbitration court in late March.
The International Chamber of Commerce (ICC) on March 23 ruled in favor of Iraq against Turkey regarding exports of Kurdistan Region oil through Turkey’s Ceyhan port, saying Ankara had breached a 1973 pipeline agreement that obliges the Turkish government to abide by instructions issued by Iraq regarding the transport of crude oil exported from Iraq.
While Erbil and Baghdad reached an agreement in early April to resume the export process, there is still no oil flowing through the pipeline to Turkey.
“What remains now are technical issues,” said Sudani in response to why the export of oil is yet to resume, adding “the Turkish side has told us they want to inspect the [port’s] tube because they suspect it needs rehabilitation because of the recent earthquake.”
Similar thoughts were echoed by President Barzani during his panel at the forum earlier in the day, saying there were some “technical aspects” preventing the implementation of the Erbil-Baghdad deal and the resumption of oil exports.
The Iraqi premier also renewed his commitment to ensuring the payment of the Kurdistan Region’s salaries, which has been extremely jeopardized following the halt in oil exports as the Region relies on the exports to pay salaries.
“Salaries are the responsibility of the federal government, whether or not oil is being exported,” he said.
The Iraqi cabinet approved the payment of 400 billion dinars to the Region for the months of November and December last year. However, Iraq’s Federal Supreme Court later ruled against Baghdad's payment of the Kurdistan Region’s financial entitlements, claiming it violates the 2021 Iraqi Budget Law.
The budget has been a point of contention between Erbil and Baghdad for several years, especially after the Kurdistan Region's decision to sell its oil through Turkey, and the emergence of the Islamic State (ISIS) in Iraq in 2014.
The Iraqi Council of Ministers in mid-March approved the federal budget bill for the years 2023, 2024, and 2025, which is currently before the Iraqi parliament. The draft budget sets out $152 billion in spending for 2023, of which the Kurdistan Region takes a 12.6 percent share.
