Top Energy Stories

Iraq's Oil Ministry has added Russia's Gazprom and the UAE's Dana Gas to its list of legal targets in a campaign to invalidate the Kurdistan region's contracts with international oil companies. In a hearing Monday at the Karkh Commercial Court in Baghdad, Judge Mohammed Ali Mahmoud Nadeem said the two companies had been sent summonses to appear as defendants in new cases filed by the ministry, though neither company has yet shown up in court. The court has already ruled in favor of the ministry in four cases that were filed in June, declaring invalid the Kurdistan Regional Government's (KRG) oil contracts with Norway's DNO, UK-listed Genel, Canada's Western Zagros, and the U.S. firm HKN. Read the full story on Iraq Oil Report.

Protests around southern Iraq are threatening to disrupt oil operations as services fail in the scorching midsummer heat and frustration grows over unemployment and government dysfunction. The most volatile recent protests targeted the Halfaya oil field in Missan province on Sunday, when rioters tried to break into a gas facility at the PetroChina-operated project, injuring 18 security officers including two who were hospitalized, according to a Sunday statement by the Missan police. Protests also turned violent on July 25 at the Gharraf oil field, in Dhi Qar province, as demonstrators blocked roads and threw stones at Oil Police forces, according to multiple security and oil officials in the province. Three Oil Police officers and five protesters were injured, according to a security official. Read the full story on Iraq Oil Report.

Iraq’s nationwide oil sales dipped by 45,000 barrels per day (bpd) in July, to 3.701 million bpd,* as some crude was diverted from exports to domestic refineries. Revenues also declined as global oil prices retreated from near-record highs earlier in the year. Baghdad earned $10.608 billion, down from $11.355 billion in June, according to the Oil Ministry, while the KRG's oil sales were worth an estimated $1.237 billion, down from $1.244 billion the prior month, according to an Iraq Oil Report estimate based on export volumes and pricing data. The deteriorating quality of Basra Heavy is also affecting state marketer SOMO’s ability to sell crude at a time when Iraq and other Middle Eastern producers are facing competition from discounted Russian Urals in the Asian market. Read the full story on Iraq Oil Report.

Climate Change and Migration

Punishing dust storms have consumed Iraq with unprecedented severity and frequency in recent months. The storms have descended upon the valleys and mountains of the northern Kurdistan region all the way down to the south in the Basra Gulf, where they temporarily interrupted trade at Umm Qasr port in May. Over a period of two months, Iraq Oil Report interviewed 50 Iraqi government officials, climate forecasters, agriculture sector workers and oil field engineers across eight provinces, as well as residents of some of the areas worst affected by dust storms. Their testimony highlights both global and national factors that contribute to the problem, as well the impact that is most acutely suffered by Iraq's most vulnerable citizens. “I consider the dust storms as climate extremism,” said Iraq’s Environment Minister Jassim Abdul Aziz al-Falahi in an interview at his Baghdad office. “The country is now in the realm of climate extremities.” Read the full story on Iraq Oil Report.

The International Organization for Migration (IOM): Migration, Environment, and Climate Change in Iraq

Iraq has been named the fifth-most vulnerable country to climate breakdown, affected by soaring temperatures, insufficient and diminishing rainfall, intensified droughts and water scarcity, frequent sand and dust storms, and flooding. Compounding this, water policies in neighbouing countries have shrunk vital water sources, while rapid population growth, urbanization, and inefficient water use by the agricultural and industrial sectors is propelling a demand for more water. Without preparation and planning, the scale of environmental change is likely to be devastating and may force Iraqis to relocate in order to survive.

Climate migration is already a reality in Iraq. At the end of 2021, IOM recorded approximately 20,000 people displaced due to water scarcity (looking at only 10 of Iraq’s 19 governorates), high salinity, and poor water quality across Iraq, while a 2021 study by the Norwegian Refugee Council found that in drought-affected areas, 1 in 15 households had a family member forced to migrate in search of work. As environmental changes intensify, displacement is likely to increase exponentially.

Preparing for and addressing the risks associated with climate-induced migration requires urgent and coordinated action. This report reviews the state of climate migration in Iraq, and considers how the Government of Iraq, international actors, and communities can mitigate, address, and prepare for its consequences. Timing is vital, and this year presents several critical opportunities to address climate migration in key international and national policy frameworks. This report identifies opportunities for action, sets out key issues related to climate migration, and concludes by offering recommendations for strategic engagement on the issue of climate migration over the next 12 months.

Politics and Diplomacy

Iraq is stuck in a purgatory of caretaker governance — unable to make strategic decisions in the oil sector and beyond — as political leaders in Baghdad escalate their 10-month power struggles over government formation into a new phase of street protests and civil unrest. The most volatile rift is the intra-Shia division between the political movement led by cleric Muqtada al-Sadr and a collection of largely Iran-backed parties united under the banner of the Coordination Framework. But oil sector issues are also playing a key role in the political dynamics, and the oil sector is suffering from Baghdad's dysfunction. Read the full story on Iraq Oil Report.

Renad Mansour and Benedict Robin-D'Cruz for Chatham House: Understanding Muqtada al-Sadr: Inside Baghdad's Sadr City

Despite the theatrics of occupying parliament, Sadr’s aim is not revolution or overturning the political system, but rather to gain more power from his Shia opponents, and Nouri al-Maliki in particular. As long Maliki is not in the picture, Sadr is willing to continue the ethno-sectarian system and work with the ruling Kurdish and Sunni elite.

But years of dominating a corrupt government has damaged Sadr’s role as a populist clerical leader and strained his relationship to his social base. His withdrawal from parliament is therefore not only about ratcheting up pressure on his political rivals, but crucially also an attempt to regenerate his legitimacy.

Indeed, understanding the Sadrist base is key to understanding Sadr himself. To this end, Chatham House’s Iraq Initiative project have conducted a rare survey of over 1,000 Sadrists from Baghdad’s Sadr City district, giving unique insights into a group that is often misunderstood.

AFP: Iraq to provide Lebanon with fuel for another year

Iraq has agreed to renew a one-year deal to provide Lebanon with fuel for its power plants in exchange for in-kind services, Lebanon's Prime Minister said in a statement Thursday.

Iraq signed an agreement in July 2021 to give cash-strapped Lebanon one million tonnes of fuel oil to help keep the lights on as the country grapples with power cuts up to 23 hours a day during an unprecedented economic crisis.

... The Iraqi oil cannot be used directly by Lebanon's power stations, so Beirut will continue to buy compatible fuel from other providers which will receive the Iraqi oil in exchange.

At the time of signing, last year's deal was worth $300-$400 million, Raymond Ghajar, the Energy minister at the time had said. As fuel prices shot up, the deal is now worth an estimated $570 million, Lebanon's Energy Minister Walid Fayad told AFP last month.

An Iraqi ministerial delegation is expected to visit Beirut shortly to agree on the in-kind services that Baghdad wants in return for the fuel, Fayad said.

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