meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraq electricity sector makes slow progress

9 May 2024

Latest news from Iraq's power and water sectors:

> Iraq plans new Baiji power plant
> Decision imminent on Iraq waste-to-energy project
> Iraq discusses nuclear projects with global watchdog
> Siemens Energy and SLB sign Iraq flare gas-to-power deal
> PowerChina in talks for Basra desalination plant
> US seeks firms for Baghdad power plant package
> Iraq plans green hydrogen project at refinery
> Iraq approves long-term grid expansion

 

In late March, Iraq’s Electricity Ministry struck a five-year gas supply deal with National Iranian Gas Company for up to 50 million cubic metres a day (cm/d), contingent on the needs of Iraqi power stations, in exchange for oil and gasoline.

The deal offers a lifeline to Iraq’s deteriorating electricity sector and replaces an existing agreement whereby contractual volumes were theoretically set at 70 million cm/d for summer and 45 million cm/d for winter.

The two countries signed the deal following nearly three months of longer-than-usual power outages in Iraq, and after Baghdad settled part of the multibillion-dollar debt it owes Iran. The power cuts occurred due to a drastic reduction in Irani gas supply, which dipped to 10 million cm/d and wiped out 4GW from Iraq’s grid.

The deal is a compromise for both countries. It allows Iraq some breathing space to implement projects to reduce its dependence on Iran’s gas exports – a long-running and elusive objective among Iraq’s policymakers and its allies in the GCC states and the US.

The crisis should prompt Iraq to push ahead with projects to boost domestic gas production and build solar power plants, according to the Electricity Ministry.

Supply and demand mismatch

There has been a persistent mismatch between supply and demand in Iraq’s electricity sector, with peak demand during the summer months outstripping available capacity by a sizeable margin.

In recent years, the deficit has returned during the winter when heating requirements rise.

With a few exceptions, however, the procurement process or negotiations for additional generation capacity have been proceeding slowly, leaving a gap that is typically addressed by diesel generators.

Iraq aspires to build 12,000MW of solar capacity by the end of the decade, which is nearly half its known available capacity today.

The Electricity Ministry has signed deals with several companies to develop sizeable solar photovoltaic (PV) capacity over the past two to three years in line with this objective. Yet, despite regular pronouncements that the construction phase for these projects is about to start, none have reached final investment decisions (FIDs) or the construction phase so far.

The Electricity Ministry remains the dominant client for these projects, although the National Investment Commission (NIC) has been an active participant, particularly in bilateral or public-private partnership projects.

For example, the UAE’s Masdar signed a deal to develop 2GW of solar capacity in Iraq with the NIC. The commission is also procuring a contract to develop the country’s first waste-to-energy (WTE) project in coordination with the Municipality of Baghdad, the Electricity Ministry and the Environment Ministry.

Located in the Al Nahrawan area of Baghdad Governorate, the planned WTE project will have the capacity to treat 3,000 tonnes of waste a day and generate nearly 80 megawatt-hours (MWh) of electricity.

Other companies that have committed to develop solar PV projects in Iraq include Power China, which has pledged to develop solar PV projects with a combined total capacity of 2GW, and France’s Total Energies, which has committed to build a 1,000MW solar farm in Artawi.

The solar project in Artawi is a small part of a $27bn package that TotalEnergies is developing in partnership with QatarEnergy. The package involves the development of a common seawater supply project and oil and gas fields in Iraq.

Awarded projects

As earlier cited, there are some exceptions to the endemic start-stop mode for Iraq’s power generation and distribution projects.

For example, Germany’s Siemens Energy and the US-based GE have ongoing projects that include retrofitting or upgrading existing gas turbine power stations or building new substations as part of agreements to help rebuild Iraq and support its goal of reducing carbon emissions.

Earlier this month, the Electricity Ministry signed a preliminary agreement with Germany’s Siemens Energy and US firm SLB, formerly Schlumberger, to explore the development of a power generation plant using flare gas.

According to Siemens Energy Middle East managing director Dietmar Siersdorfer, the planned flare gas-to-power project in southern Iraq will help reduce carbon dioxide emissions and capture value from gas that would otherwise be wasted.

The planned flare gas-to-power plant could have a generation capacity of up to 2,000MW.

In January this year, China-based Oriental International is understood to have signed a contract to convert a single-cycle unit at the Baghdad South power plant complex into a combined-cycle power plant.

In April, the Electricity Ministry awarded another Chinese company, China Machinery Engineering Corporation (CMEC), a second year of operation and maintenance contracts for the Salah Al Din gas-fired power plant.

CMEC was awarded the estimated $1bn contract to build the power plant in northern Iraq in 2011. After a series of delays and challenges, including the Isis uprising, the two 630MW capacity units began operating last year.

In December last year, Siemens Energy also signed a contract to deliver five high-voltage substations on a turnkey basis in Iraq. The 400-kilovolt substations, each with a capacity of 1,500MW, will be installed in Baghdad, Diyala, Najaf, Karbala and Basra.

Similarly, the US’s preoccupation with helping wean Iraq off Iran’s gas and electricity imports has spurred projects to interconnect Iraq’s grid with its neighbour Saudi Arabia through the GCC grid and Jordan.

In October last year, the governor of Saudi Arabia’s Eastern Province, Prince Saud Bin Naif Bin Abdulaziz, inaugurated the GCC grid's Iraq connection, which had been under development for several years. The 295-kilometre power transmission network will have a total transmission capacity of 1,800MW, with an initial phase expected to supply 500MW of electricity to Iraq.

Future projects

In February this year, Electricity Ministry spokesperson Ahmed Mousa said the government had approved funds for the long-term plans to expand the country’s power transmission and distribution network with Siemens Energy’s help.

Mousa said the ministry “received funds for long-term plans to develop the electricity sector in 2023 … the three-year budget approved in 2023 also includes funds this year and in 2025”. 

In early May, it was reported that the Electricity Ministry held discussions with Qatar’s UCC Holding to develop a 2,100MW gas-fired power plant in Baiji. The plant will replace a power station that was damaged during the war.

It is unclear if the project is part of a previous agreement between UCC Holding and NIC to develop two power plants with a capacity of 2,400MW in Iraq.

A new 2,000MW gas-fired power plant is also being proposed in Basra, which is expected to receive gas from the nearby West Qurna 1 and West Qurna 2 oil fields.

As it is, several projects are waiting for final approvals, such as the gas-fired 2,800MW Khairat independent power producer, which has yet to reach FID over two years after the contract was awarded.  

Going nuclear 

Project delays and indecision in Iraq do not appear to narrow down the options for future power generation expansion.  

In March, it was reported that senior Iraq and International Atomic Energy Agency (IAEA) officials had discussed Iraq’s plans for a possible nuclear energy programme, including small modular reactors.

According to the nuclear watchdog, discussions included maintaining strict adherence to non-proliferation norms.

IAEA director general Rafael Mariano Grossi said his agency has committed to supporting the foundations of what should be an entirely peaceful programme in Iraq.

Iraq, for its part, is considering nuclear energy to enable greater energy security and for water desalination projects as part of the country’s plans for a more sustainable future.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11745270/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Dubai picks contractor for Al-Maktoum airport terminal

    9 October 2026

     

    Dubai Aviation Engineering Projects (DAEP) has selected a contractor for an estimated AED10bn ($2.7bn) substructure package for the West Terminal, as part of the first phase of the $35bn expansion of Al-Maktoum International airport.

    A joint venture of Beijing-headquartered China Civil Engineering Construction Corporation (CCECC) and Abu Dhabi-based Tristar Engineering & Construction will execute the contract.

    According to a description on DAEP’s website, the expanded airport’s West Terminal will be a seven-level facility spanning 800,000 square metres, with annual capacity for 45 million passengers.

    The terminal will be the second of three planned terminals at Al-Maktoum International airport. It will connect to the airside via a 14-station automated people-mover (APM) system.

    In July, MEED exclusively reported that DAEP had awarded an estimated $1.5bn contract to a joint venture of Japan’s Mitsubishi Corporation and Indian contractor Larsen & Toubro for the APM system.

    The APM will run beneath the apron and terminal areas, using multiple tracks to transport passengers between terminals and concourses. Four underground stations are planned in the first phase, while the full airport development is expected to include 14 stations.

    The latest awards form part of a wider programme of contracts recently signed by DAEP, covering enabling works, the second runway, initial structural foundations for passenger terminals and concourse substructures.

    Upcoming awards

    In June 2026, DAEP said it will award construction contracts worth over AED55bn ($15bn) for Al-Maktoum International airport by the end of the year.

    At the time, DAEP said the planned awards included substructure works for the West Terminal, the fourth aircraft concourse and the baggage-handling system. The programme also included superstructure works for the West Terminal and the first, second and third aircraft concourses.

    The packages are expected to include long-span structural frameworks for buildings covering about 1.5 million square metres, infrastructure works for the southern airfield area, and power-generation and district-cooling plants supporting the construction programme.

    DAEP also plans to award façade and roofing packages in 2026.

    The Dubai Government approved updated designs and timelines for its largest construction project in April 2024. In September 2024, MEED exclusively reported that a team comprising Austria’s Coop Himmelb(l)au and Lebanon’s Dar Al-Handasah had been confirmed as lead masterplanning and design consultants for the Al-Maktoum International airport expansion.

    Construction of the airport is planned in three phases. Once complete, the airport will cover 70 square kilometres south of Dubai and include five parallel runways and 430 aircraft gates.

    It will be five times the size of Dubai International airport and is planned to have a passenger-handling capacity of 260 million passengers a year – the largest in the world. For cargo, it is planned to have the capacity to handle 12 million tonnes a year.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20417755/main.jpg
    Yasir Iqbal
  • Nakheel awards Dubai Islands marine works contract

    9 October 2026

    Dubai-based developer Nakheel, part of Dubai Holding Real Estate, has awarded local firm Mar Marine & Building Contracting a contract for marine and beach works on Island B at Dubai Islands.

    The scope includes constructing breakwaters, removing existing rock revetments and forming a new 320-metre beach near the Bay Villas development.

    The contractor will also refurbish existing beach areas and undertake remedial works along approximately 3 kilometres of the island’s western shoreline.

    The works are scheduled for completion in the fourth quarter of 2027.

    The package supports the Bay Villas project, which comprises 636 villas and townhouses on Island B. Nakheel awarded Fibrex Contracting an AED2.6bn ($708m) construction contract for the residential development in August 2025.

    The marine works award follows Nakheel’s AED527m primary infrastructure and utilities contract for Island B, which was awarded to Al-Nasr Contracting Company in April 2026.

    In September, Nakheel awarded a main construction contract worth more than AED800m ($218m) for phases one and three of Bay Grove Residences at Dubai Islands. The contract was awarded to local firm Metac General Contracting Company.

    The contract covers the construction of 537 apartments, comprising one- to four-bedroom units, across seven residential buildings. Phase one includes 296 units in four buildings, while phase three comprises 241 units across three buildings.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20418469/main.jpg
    Yasir Iqbal
  • Iraq refinery project given regional approval

    9 October 2026

    Plans to establish a 70,000-barrel-a-day (b/d) refinery in the Iraqi town of Qayyarah have been approved by the Nineveh Provincial Council, which has called for the project to be referred to Iraq’s Council of Ministers. The council also recommended that Duhok-based Karband Company, an industrial manufacturer of asphalt products and lubricating oils, be involved in the project.

    The council’s vote follows a meeting held in September between Iraq’s Oil Ministry and Angola’s Sonangol on potentially jointly developing the Qayyarah refinery.

    The planned refinery would allow more of the crude produced in Qayyarah to be processed locally, increasing supplies of petroleum products and reducing the need to transport locally produced crude south for export via the Strait of Hormuz.

    Iraq awarded the Qayyarah oil field to Sonangol in its second licensing round in 2009, with an initial target of around 120,000 b/d.

    A new upstream expansion phase began in January 2025, when Sonangol contracted the Iraqi Drilling Company to drill 10 wells, with an option for three additional appraisal wells.

    An existing refinery in Qayyarah, built in 1955, has a capacity of 20,000 b/d.

    Progress on the new facility has stalled in recent years, with little movement since 2021, when Iraq signed a memorandum of understanding with Sweden’s SEAB and Turkiye’s Limak on developing the refinery.

    Previously, Iraq’s Oil Ministry said the project would include modern units and complex refining technology to produce products meeting Euro 5 standards

    The scope of the project is expected to include:

    • Processing units
    • Storage tanks
    • Distillation units
    • Associated facilities

    The project was first announced in 2018 and has encountered several delays due to funding problems.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20413126/main.png
    Wil Crisp
  • Oil exploration work ongoing in Iraq’s Block 7

    9 October 2026

     

    Oil and gas exploration is ongoing across Iraq’s Block 7, which spans the central and southern governorates of Diwaniyah, Babil, Najaf, Wasit and Muthanna.

    The work includes seismic activities, according to industry sources. The sources added that stakeholders have not yet made a final decision on plans for full-field development in the area.

    China National Offshore Oil Corporation (CNOOC) won the exploration, development and production contract for Iraq’s Block 7 in May 2024.

    Block 7 was one of 10 blocks in Iraq that were won by Chinese companies as part of the country’s sixth licensing round.

    Erbil-based KAR Group was the only non-Chinese firm to secure acreage.

    On 19 May, Osama Hussein, director general of Iraq’s state-owned Oil Exploration Company (OEC), visited Block 7 and met the Fourth Seismic Crew of the Field Operations Division in Diwaniyah Governorate to review progress on the seismic survey.

    In a subsequent statement, OEC said the crew began operations on 5 May 2026 under a 180-day work programme.

    Block 7 covers 6,300 square kilometres within the Mesopotamian tectonic zone, located near existing petroleum infrastructure and established oil discoveries. The block was first offered during Iraq’s fourth licensing round in 2012, where it failed to attract bids.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20411257/main.png
    Wil Crisp
  • Contractors prepare bids for more Qiddiya infrastructure

    8 October 2026

     

    Saudi gigaproject developer Qiddiya Investment Company (QIC) has tendered a design-and-build contract covering infrastructure works at District 0 in Qiddiya City.

    The scope includes the design, supply, construction, testing, commissioning and defects liability period for Road I in District 17, Road Q in District 19 and the District 18 Ring Road.

    In total, the package covers approximately 17.4 kilometres of roads, including 1.4km of bridge structures.

    Contractors have until 14 October to submit proposals.

    Beirut-headquartered Dar Al-Handasah is the lead design consultant for districts 17 and 19, with a remit that also includes potable water and recycled water storage tanks and pumping stations.

    US-based Jacobs is the lead design consultant for the District 18 Ring Road.

    The tender is the third infrastructure package for Qiddiya’s District 0. The first two packages, tendered in March, remain under procurement, as MEED exclusively reported.

    MEED understands that bid evaluation for these packages is in its final stages and that awards are expected shortly.

    QIC is also advancing plans to develop additional assets at Qiddiya City.

    Last month, MEED exclusively reported that QIC had awarded an estimated $500m-$600m contract to build an e-games arena, known as the Fortress Arena.

    The scope of work includes the construction of an auditorium with a capacity of about 5,100 seats, as well as commercial areas, hospitality facilities and other associated infrastructure.

    The Fortress Arena is one of several major projects within the wider Qiddiya development.

    Other projects include the Dragon Ball theme park, Prince Mohammed Bin Salman Stadium, a horse-racing venue, a performing arts centre, the Speed Park, the National Tennis Centre, Six Flags Qiddiya City and Aquarabia water park.

    The project is a key part of Riyadh’s strategy to boost leisure tourism in the kingdom. According to UK analytics firm GlobalData, leisure tourism in Saudi Arabia has grown significantly in recent years.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20384978/main.jpg
    Yasir Iqbal