meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraq’s energy sector steadily expands

15 May 2023

MEED's latest coverage on Iraq's energy projects market includes:

> PIPELINE STOPPAGE: Turkiye yet to respond to Iraqi oil request
> CHEMICALS: Iraq continues technical studies for $8bn chemical project
> UPSTREAM DEVELOPERS: No place like Iraq for international oil firms
> OIL TRAINS: Key Iraq oil project units arriving in third quarter
> GAS: Iraq gas project on track for commissioning this year
> INVESTMENT: Total deal could lead to project boom in Iraq
> RUMAILA FIELD: BP and PetroChina prepare to award Iraq oil contract

 

Iraq's oil and gas projects market has steadily expanded over recent months, with the total value of the country's active oil, gas and chemical projects rising by nine per cent since the start of 2020.

As of 2 May 2023, Iraq’s active oil, gas and chemical projects were worth an estimated $143.9bn, up from $132.2bn on 7 January 2020, according to data collected by the regional project-tracking service MEED Projects.

Over the period, in nominal terms, the country’s energy project market expanded by $11.7bn, which is far larger than some of its regional competitors, but also lagging behind some key markets that are continuing to see a dramatic expansion in project activity.

In terms of energy project market expansion, Iraq has outperformed countries such as Algeria, Kuwait and Libya.

Countries that have performed far better than Iraq include Egypt, Qatar, Saudi Arabia and the UAE.

Over the period, energy project activity has surged in Saudi Arabia, which overtook Iraq to become the region’s largest market for hydrocarbon projects in mid-2022.

Since the start of January 2020, the total value of Saudi Arabia’s active oil, gas and chemical projects has increased by $61.3bn, rising from $112.7bn to $174.1bn.

Over the same period, the total value of Egypt’s active oil, gas and chemical projects sector has expanded by $46.6bn, according to MEED Projects, rising to $136.1bn.

Nations such as Saudi Arabia and Egypt have made ground on Iraq in terms of the size of their energy project markets, partly by taking advantage of Europe’s efforts to shift away from Russian energy imports.

They are also investing in hydrocarbon and chemical technologies that will likely see increased demand during the ongoing global energy transition, such as upstream gas production, the production of the precursors to plastics, and ammonia production.

Political uncertainty

While Iraq has seen its energy projects market steadily expand, it has missed out on the dramatic growth seen in Saudi Arabia and Egypt due to a range of factors.

A key factor that has hobbled Iraq’s expansion over recent years has been political instability and an inability to make critical policy decisions regarding the country’s economy.

In 2022, the caretaker government failed to pass a budget amid political wrangling. The interim parliament, which had limited access to funds, passed a $17bn emergency package called the Food Security and Development Bill, but was not mandated to make important decisions about major projects.

Multi-year budget

From a political perspective, there is reason to be more optimistic about Iraq’s ability to make future investment decisions due to the finalisation of a three-year budget law in March this year.

A draft budget of ID197.82tn ($152.17bn) was announced for 2023, with an agreed operational expenditure of ID150.27tn ($115.59bn), and an investment expenditure of ID47.55tn ($36.58bn).

The budget is drafted to allow it to be repeated in 2024 and 2025. It is the first time an Iraqi government has drafted a multi-year budget, having typically passed one-year budgets.

Ahead of the budget agreement, Iraq made a string of major project announcements. These include plans to revive the $8bn Nebras petrochemicals complex in Basra.

The multi-year budget should also allow for more strategic projects to pass over the coming months, allowing Iraq to adapt to changing market conditions, including the global energy transition and shifting dynamics in Europe and Asia.

Iraq has already signalled that it is looking to modernise its downstream oil sector, improving the complexity of existing refineries and building new facilities.

Gas projects

In terms of gas sector projects, progress will likely be made on existing projects to capture gas from oil fields that would otherwise be flared. More projects of this type could be announced shortly.

Iraq and its international partners are likely to prioritise these projects because they provide increased gas supplies and new revenue streams and have a positive environmental impact.

Iraq-Turkiye tensions

Although the political outlook is improved by the increased certainty regarding annual budgets, the country’s energy projects market could experience growing disruption over the coming months due to tensions between Iraq’s federal government, the Kurdish Regional Government (KRG) and the government of Turkiye.

At the end of March, in the wake of a ruling by the International Chamber of Commerce Court of Arbitration last month, the oil export pipeline that extends from the north of Iraq to the Turkish port of Ceyhan was shut down.

The pipeline is a key export route for Iraq. When operating normally, it transports 400,000 barrels a day (b/d) from Iraqi Kurdistan and 70,000 b/d from the rest of Iraq.

On 4 April in Baghdad, Iraqi Prime Minister Mohammed al-Sudani and the Prime Minister of the Iraqi Kurdistan Region, Masrour Barzani, signed a temporary agreement designed to restart oil exports from the north of the country.

Despite this, after more than a month, oil exports via the pipeline are yet to resume.

The lengthy stoppage and lack of clarity over when exports will recommence have cast a shadow across Iraq’s oil sector, forcing oil fields in the north of the country to seal wells and stop production and putting the future of planned upstream projects in doubt.

While there remains a cause for concern regarding political stability in Iraq, the fundamentals for the country’s oil and gas sector remain sound.

Iraq's state-owned oil companies and their international partners have shown in the past that they can negotiate difficult political and security situations, and the country will likely be able to continue to steadily grow its energy projects market over the months to follow.

MEED's June 2023 special report on Iraq includes:

> GOVERNMENT: Sudani makes fitful progress as Iraq's premier
> ECONOMY: Iraq hits the spend button
> POWER: Iraq power projects make headway
> UPSTREAM DEVELOPERS: No place like Iraq for international oil firms
> CHEMICALS: Iraq continues technical studies for $8bn chemical project
> SOLAR: Total continues 1GW Iraq solar talks
> TRANSPORT: Baghdad approves funds for metro and airport projects

 

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/10825124/main.gif
Wil Crisp

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

Click here to register
Exclusive from Meed
Related Articles
  • Kuwait tenders refinery contract

    15 July 2025

    State-owned downstream operator Kuwait National Petroleum Company (KNPC) has issued a tender covering the development of three gas recovery units at the Mina Al-Ahmadi refinery.

    KNPC will host a meeting on 22 July with bidders to discuss the scope of work on the tender. It has set a deadline of 12 August for submission of bids.

    The front-end engineering and design (feed) work for the project was carried out by Greece’s Asprofos Engineering.

    The tender uses the engineering, procurement and construction (EPC) contract model.

    The scope of the EPC contract includes developing:

    • A refinery flare gas recovery unit
    • A high-pressure gas plant flare gas recovery unit
    • An acid gas plant flare gas recovery unit

    In October last year, Kuwait Petroleum Corporation (KPC), KNPC’s parent company, announced plans to reduce volumes of flared gas in the country.

    At the time, KPC said that its upstream subsidiary Kuwait Oil Company (KOC) had reduced total gas flaring to below 1% since 2020 from about 17% in 2005.

    It also said that Kuwait Gulf Oil Company, which manages Kuwait’s share of production in the Neutral Zone shared with Saudi Arabia, was investing in projects to reduce gas flaring to 1% “in the medium term”.

    KPC did not provide flaring data for KNPC at the time, but said that the company had installed “efficient heaters” and taken other steps to reduce emissions.

    KPC has pledged to reach zero routine flaring for its domestic upstream assets by 2030, and for all of its subsidiaries by 2040.

    READ THE JULY 2025 MEED BUSINESS REVIEW – click here to view PDF

    UAE and Turkiye expand business links; Renewed hope lies on the horizon for trouble-beset Levant region; Gulf real estate momentum continues even as concerns emerge

    Distributed to senior decision-makers in the region and around the world, the July 2025 edition of MEED Business Review includes:

    > PROJECTS MARKET: GCC projects market collapses
    > GULF PROJECTS INDEX: Gulf projects index continues climb
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14265537/main.png
    Wil Crisp
  • Webuild wins $600m Diriyah Square project deal

    14 July 2025

    Italian contractor Webuild has announced that it has won a $600m contract from Diriyah Company for a package for the Diriyah Square project.

    The contract relates to construction works on package three of the Diriyah Square project. It involves the finishing and mechanical, electrical and plumbing works on more than 70 buildings and public spaces within Diriyah Square.

    These assets cover a total area of about 365,000 square metres.

    Webuild is already working on the underground multi-storey car park at Diriyah Square.

    The three-floor underground car park will serve the mixed-use Diriyah Square district, which will include leisure and entertainment, hotels, retail, grade A offices, the King Salman Grand mosque and residential units designed in the traditional Najdi architectural style.

    The car park has a floor area of 1 million square metres, with underground roads and tunnels below Diriyah Square, and a capacity for 10,500 cars.

    The parking facility will directly connect commuters with all of Diriyah’s destinations, including Wadi Hanifah, the Western Ring Road and a national motorway. It will be a key component of the City of Riyadh Arterial Road system.

    In an official statement on its website, Webuild said that the construction works on the car park are 55% completed.

    MEED reported in January 2021 that Diriyah Company had selected Webuild for the super basement car park at the Diriyah project in Riyadh.

    Diriyah gigaproject

    The Diriyah masterplan envisages the city as a cultural and lifestyle tourism destination. Located northwest of Riyadh’s city centre, it will cover 14 square kilometres and combine 300 years of history, culture and heritage with hospitality facilities.

    The company awarded several significant contracts last year, including three contracts worth over SR21bn ($5.5bn). These included an estimated $2bn contract awarded to a joint venture of El-Seif Engineering & Contracting and China State to build the North Cultural District.

    In July last year, Diriyah also awarded a $2.1bn package to a joint venture of local contractor Albawani and Qatar’s Urbacon to construct assets in the Wadi Safar district of the gigaproject.

    Then in December, Diriyah Company awarded an estimated SR5.8bn ($1.5bn) contract to a joint venture of local firm Nesma & Partners and the local branch of Man Enterprise for its Jabal Al-Qurain Avenue cultural district, located in the northern district of the Diriyah Gate project.

    Once complete, Diriyah will have the capacity to accommodate 100,000 residents and visitors.

    READ THE JULY 2025 MEED BUSINESS REVIEW – click here to view PDF

    UAE and Turkiye expand business links; Renewed hope lies on the horizon for trouble-beset Levant region; Gulf real estate momentum continues even as concerns emerge

    Distributed to senior decision-makers in the region and around the world, the July 2025 edition of MEED Business Review includes:

    > PROJECTS MARKET: GCC projects market collapses
    > GULF PROJECTS INDEX: Gulf projects index continues climb
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14259832/main.jpg
    Yasir Iqbal
  • August deadline for Diriyah Pendry superblock package

    14 July 2025

     

    Saudi gigaproject developer Diriyah Company has asked firms to submit commercial proposals by 13 August for a contract to build the Pendry superblock package in the second phase of the Diriyah Gate development (DG2).

    MEED understands that the tender was issued in June, with the technical bid submission deadline set for 6 July.

    The Pendry superblock encompasses the construction of a hotel, known as the Pendry Hotel, along with residential and commercial assets.

    The project will span an area of 75,365 square metres and is located in the northwestern district of the DG2 area.

    Earlier this month, MEED exclusively reported that Diriyah Company is preparing to tender more superblock packages this quarter, following the receipt of prequalification statements from interested firms.

    Notices were issued in mid-June for packages that include the Waldorf Astoria superblock and the Edition superblock, both located in DG2.

    The Waldorf Astoria superblock is a mixed-use development featuring the Waldorf Astoria Residences & Hotel, commercial and residential facilities and office spaces.

    The Waldorf Astoria Hotel is a 200-key property, while the Waldorf Astoria Residences will offer around 46 branded residences.

    The project is located along the Grand Boulevard South and the Northern Arterial Road in the Boulevard Northwestern district at DG2. 

    The prequalification documents for this package were submitted on 29 June.

    Prequalification documents for the Edition superblock were submitted on 2 July.

    This package comprises a mix of residential, commercial and office spaces, including the 200-key Edition Hotel and 150-key Equinox Hotel.

    The project is situated between King Khalid Road and the Grand Boulevard within the Boulevard East district in DG2.

    Diriyah Company has also received prequalification statements from firms interested in constructing the upcoming Radisson Red superblock in DG2.

    The Radisson Red superblock comprises a hotel, residential apartments, retail facilities, commercial office spaces and a park.

    The project is situated in the Boulevard East district, between King Khalid Road and the Grand Boulevard in Diriyah.

    Diriyah also tendered a contract in April to build the new iconic museum in the DG2 area. 

    Diriyah gigaproject

    The Diriyah masterplan envisages the city as a cultural and lifestyle tourism destination. Located northwest of Riyadh’s city centre, it will cover 14 square kilometres and combine 300 years of history, culture and heritage with hospitality facilities.

    The company awarded several significant contracts last year, including three contracts worth over SR21bn ($5.5bn). These included an estimated $2bn contract awarded to a joint venture of El-Seif Engineering & Contracting and China State to build the North Cultural District.

    In July last year, Diriyah also awarded a $2.1bn package to a joint venture of local contractor Albawani and Qatar’s Urbacon to construct assets in the Wadi Safar district of the gigaproject.

    Then in December, Diriyah Company awarded an estimated SR5.8bn ($1.5bn) contract to a joint venture of local firm Nesma & Partners and the local branch of Man Enterprise for its Jabal Al-Qurain Avenue cultural district, located in the northern district of the Diriyah Gate project.

    Once complete, Diriyah will have the capacity to accommodate 100,000 residents and visitors.

    READ THE JULY 2025 MEED BUSINESS REVIEW – click here to view PDF

    UAE and Turkiye expand business links; Renewed hope lies on the horizon for trouble-beset Levant region; Gulf real estate momentum continues even as concerns emerge

    Distributed to senior decision-makers in the region and around the world, the July 2025 edition of MEED Business Review includes:

    > PROJECTS MARKET: GCC projects market collapses
    > GULF PROJECTS INDEX: Gulf projects index continues climb
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14258798/main0303.jpg
    Yasir Iqbal
  • Penspen to expand workforce in Neutral Zone

    14 July 2025

     

    UK-based engineering and project management company Penspen is expanding its headcount in the Neutral Zone, which is shared by Saudi Arabia and Kuwait, according to a senior executive.

    Penspen currently has 130 employees working in the Neutral Zone, also known as the Divided Zone. The company expects to increase the headcount to 200 by the end of the year, according to Neale Carter, the company’s executive vice-president for the Middle East, Africa and Asia-Pacific.

    “It’s a challenging environment, but we’re very pleased to be there,” he said.

    Penspen was invited to join the tendering programme for a range of projects for state-owned Kuwait Gulf Oil Company (KGOC), which is a partner in Al-Khafji Joint Operations (KJO) alongside Saudi Arabia’s Aramco Gulf Operations Company (AGOC).

    Penspen was previously the project management consultant for KJO in the Neutral Zone from 2006 until 2017, when US-based Jacobs replaced them in the role.

    Penspen then went through the tendering process in 2022 and won the contract back in 2023.

    The current contract is a five-year project management consultancy services contract.

    The Neutral Zone has seen an uptick in oil and gas activity in the past couple of years.

    In May, MEED reported that KJO has more than 20 projects currently ongoing to develop the Khafji field, which is located in the shared territory.

    Additionally, KJO is currently in the tendering phase with engineering, procurement and construction (EPC) works on the Dorra gas field development project, which is also located in the Divided Zone.

    KJO has divided the scope of work on the Dorra gas field development project, which is estimated to be valued at up to $10bn, into four EPC packages – three offshore and one onshore.

    In May, Saudi Arabia and Kuwait announced a new oil discovery in the shared territory.

    The oil was discovered in the North Wafra Wara-Burgan field, located five kilometres north of the onshore Wafra field, within Wafra Joint Operations – a 50:50 joint venture of Kuwait Gulf Oil Company and US energy company Chevron.

    READ THE JULY 2025 MEED BUSINESS REVIEW – click here to view PDF

    UAE and Turkiye expand business links; Renewed hope lies on the horizon for trouble-beset Levant region; Gulf real estate momentum continues even as concerns emerge

    Distributed to senior decision-makers in the region and around the world, the July 2025 edition of MEED Business Review includes:

    > PROJECTS MARKET: GCC projects market collapses
    > GULF PROJECTS INDEX: Gulf projects index continues climb
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/14254527/main.jpg
    Wil Crisp
  • Saudi Arabia signs deals for $8.3bn of renewables projects

    14 July 2025

    Register for MEED’s 14-day trial access 

    A consortium of Acwa Power, Water & Electricity Holding Company (Badeel) and Saudi Aramco Power Company (Sapco) has signed power purchase agreements (PPAs) with Saudi Power Procurement Company (SPPC) for seven renewable energy projects that will require $8.3bn of investment.

    The projects, which have a total capacity of 15,000MW, include five large-scale solar photovoltaic plants with a total capacity of 12,000MW and two large-scale wind energy plants with a total capacity of 3,000MW.

     

    Financial closes are expected by the third quarter of 2025. The projects are scheduled to start operating in the second half of 2027 and the first half of 2028.

    The projects are part of Saudi Arabia’s National Renewable Energy Programme (NREP), which is led and supervised by the Energy Ministry. PIF has committed to developing 70% of Saudi Arabia’s renewable energy target capacity by 2030.

    With the addition of these new projects, Acwa Power's solar and wind portfolio in Saudi Arabia now comprises 21 projects, representing more than 34GW of combined renewable capacity. Acwa Power's total renewable capacity portfolio, which includes projects in other countries, totals 51.9GW.

    The Public Investment Fund (PIF) is the largest shareholder in Acwa Power; it is listed on the Saudi Stock Exchange (Tadawul) with a 44% stake. The PIF wholly owns Badeel. The PIF holds a 16% stake in Aramco, which is also listed on the Tadawul.

    Acwa Power recently said it is raising SR7.1bn ($1.9bn) with a rights issue to finance its equity contributions in its growing portfolio of domestic and international energy and water projects, as part of its plan to triple managed assets by 2030.

    According to the prospectus for the rights issue, between 75% and 85% of the proceeds will go towards funding its share in current and upcoming projects, while up to 20% may be used for mergers and acquisitions. The remainder will support corporate activities and early-stage project development to accelerate delivery timelines.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/14258744/main.jpg
    Colin Foreman