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Welcome to This Week in Iraq, your one-stop source for all of the most important Iraq news, curated by the editors of Iraq Oil Report. To sign up and receive this free newsletter in your inbox every week click here.
Top Stories
Iraq’s Shia Islamist political parties are still scrambling to find a way forward in forming the next government after U.S. President Donald Trump announced his opposition to former Prime Minister Nouri al-Maliki. Coordination Framework leaders find themselves in an awkward position: either they must risk alienating the United States at a moment when the Trump administration has proven its willingness to use its power over global finance and trade to punish perceived enemies, or they must implicitly acknowledge the extent to which the choice of prime minister is not a fully sovereign Iraqi decision. Meanwhile, Kurdish parties remain at odds over the presidency, the next major procedural step for Parliament in government formation. Read Iraq Oil Report's full story.
A major upgrade for Basra's flagship refinery is coming online, which means a boost to the country's production of high-quality fuel, while reducing a problematic glut of high-sulfur fuel oil. The Fluid Catalytic Cracking (FCC) project, which began in 2021, was partially funded by a $3.7 billion soft loan from the Japan International Cooperation Agency (JICA). The newly installed infrastructure ultimately will take 55,000 bpd of low-quality HFO feedstock and turn it into gasoline, reducing the need for costly imports. Read Iraq Oil Report’s full interview with the director of the project, Habib Abdul Amir.
Energy & Economy
Iraq has submitted an updated compensation plan to OPEC. A Feb. 1 statement by OPEC said Iraq and seven other members had updated their plans to make up for past production that had exceeded quota targets dating back to January 2024. Iraq's baseline quota for January through March is set at 4.273 million bpd; factoring in the updated compensation pledges, Iraq's net effective quota is now 4.133 million bpd in January, 4.138 million bpd in February, and 4.183 million bpd in March. For a deeper look at Iraq's production and exports, see the Iraq Oil and Financial Dataset.
Iraq is targeting an ambitious 2028 goal to end gas imports, according to Mudhir Mohammed Salih, a senior advisor in the Iraqi Prime Minister's Office. In an interview with Zawya, he outlined ambitions to end associated gas flaring, develop natural gas assets, expand refineries and processing plants, and ultimately supply power plants and industrial facilities. The plans would require as much as $15 billion in new investment, to be paid by Iraq, international companies, and financing by institutions such as the World Bank. Efforts to improve nationwide rates of associated gas capture have been popular across multiple Iraqi administrations, since they promise both cost savings on electricity feedstock and improved power generation. That said, the fate of any specific set of plans is deeply uncertain given the impending change in government following national elections in November 2025.
Excelerate Energy says it has finished trials of its floating LNG units, the next step before deployment to Iraq before summer. The Iraqi News Agency reports the Floating Storage and Regasification Unit (FSRU), built by Hyundai Heavy Industries in South Korea, is expected to be delivered by June to Khor al-Zubair. It will receive up to 500 million cubic feet per day of imported liquefied natural gas and send it via pipelines to power plants across the country. The initiative has been plagued by delays; the Iraqi government first projected the LNG imports would begin in summer 2025.
Russia’s Lukoil has reached a preliminary agreement to sell most of its foreign energy assets to U.S. private equity firm Carlyle Group, Reuters reports. The proposed deal, valued at about $22 billion, remains subject to U.S. Treasury and other regulatory approvals and follows U.S. sanctions that have constrained Lukoil’s overseas operations. It remains unclear exactly how that transaction would affect ongoing negotiations for Chevron to take over operatorship of West Qurna 2, which is now being managed by Basra Oil Company on a temporary basis after Lukoil's force majeure declaration.
Security
The United States has slowed the transfer of suspected Islamic State detainees from northeast Syria to Iraq, citing Iraqi capacity constraints and legal concerns, Reuters reports. The move affects efforts to relocate thousands of detainees held in Kurdish-run facilities in Syria. Iraqi officials said Baghdad remains committed to receiving detainees in phases but warned that court capacity, prison overcrowding, and security risks limit how quickly transfers can proceed.
Opinion, Analysis, and Commentary
China's "long game" approach is playing out in Iraq, according to a new report by Sardar Aziz and Mohammed A. Salih for the Atlantic Council. They argue that China’s footprint in energy, infrastructure, telecommunications, and consumer markets in Iraq is deepening as part of its global competition with the U.S. Baghdad’s economic needs, demographic trends, and desire to diversify partnerships have made Iraq receptive to China.
A group of Iraqi economic experts warn that Iraq’s financial troubles are the product of a structural crisis, Shafaq News reports. They cite dependence on oil revenues, state spending on public-sector payroll, and weak non-oil revenue collection as key flaws that threaten Iraq's economic stability.
Iraq risks its opportunity to be a "global energy powerhouse" if sectarianism expands under the next government, Furat Al-Mousawi, Director of the Iraq Energy Center, argues in a column in Al-Aalem. He advocates for political actors to prioritize national interests over faction-based positioning, especially amid ongoing disputes over government formation and leadership appointments. "Iraq has yet to develop a comprehensive national energy strategy spanning two or three decades," he writes. "The absence of this vision leads to fragmented decisions, driven more by political expediency than by long-term economic planning."
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