ERBIL, Kurdistan Region - Iraq must invest in repositioning its energy mix, the country’s finance minister said on Saturday, stressing that the country cannot make the same mistakes of the past and rely solely on exporting oil, but rather must become an exporter of other sources of energy as well.
The sixth Iraq Energy Forum kicked off on Saturday at the American University of Iraq - Baghdad (AUIB) in the country's capital, attended by a range of experts, industry leaders, and government officials from Iraq, the Middle East, and the rest of the world.
At the event, organized by the independent Iraq Energy Institute, Iraq’s Minister of Finance Ali Allawi addressed the country’s current financial situation, dreading the consequences of the overreliance on exporting oil as a source of income.
“Can we afford to be constantly pumping out oil into a global market where the structure is working against us, even though not in the short term? My answer is no,” Allawi said in his speech at the event, adding “we have to seriously think about shifting our capital investment while sustaining the oil production as it is but shifting into value added. Iraq must not become an oil exporter only. It must become an energy exporter.”
The Iraqi government is dependent on oil revenues to cover its costs and pay the salaries of civil servants. Despite suffering in much of 2021 due to record low oil prices, the country's economy is once again on the rise as oil prices are increasing globally.
Iraq profited over $11 billion dollars in oil revenue in the month of May, exporting over 100 million barrels, marking the second income record set by the country since the beginning of the year.
Allawi told the audience that Iraq had a “massive opportunity” to reposition its energy mix, and become a global exporter of electricity. The minister addressed the irony of that statement considering the current ongoing electricity crisis in the country, but provided his reassurance that Iraq was capable of such a challenge through “submarine cables, using the best up to date technologies, and massively focusing on carbon capture and sequestration.”
Iraq suffers from chronic electricity shortages, especially felt when summer temperatures reach over 50 degrees Celsius. The high temperatures also lead to very high consumption of power.
Iran on Wednesday announced that it had received $1.6 billion of the money owed by Iraq in return for Tehran’s gas exports over the years.
The minister said that Iraq must not repeat the same mistakes of the last 40 years that have led to “squandering” the country’s limited resources through wars, confrontations, dysfunctional governments, and unhealthy demands on the resource in an unproductive way.
“If we make the right choices, the right partners, and the right strategic orientation, I think this country can easily be the world’s center of energy trading for the 21st century and beyond.”
Iraq is the fifth-most vulnerable nation in the world to the effects of climate change, including water and food insecurity. Earlier this month Iraqi President Barham Salih said that addressing climate change is a "national priority."
The energy forum will continue until Monday.
