US seeks energy dominance in Iraq, challenging Chinese influence, 11 OCT

US seeks energy dominance in Iraq, challenging Chinese influence

Shafaq News/ The US government is intensifying efforts to bring American companies into Iraq’s energy sector, seeking to surpass Chinese investors, reduce emissions from Iraq’s oil and gas production, and limit Iran’s influence, according to a report from the American Forbes magazine.

Geoffrey Pyatt, the State Department’s Assistant Secretary for Energy Resources, emphasized Iraq’s strategic importance, “Everybody recognizes the asset that Iraq represents, second largest proven reserves in OPEC,” he told Forbes. Iraq holds 145 billion barrels of proven oil reserves, an amount expected to last about 100 years at current production rates, according to World Bank estimates.

Since the US invasion in 2003, which left Iraq’s energy infrastructure severely damaged, the country has struggled to rebuild its electricity grid. Now, the Biden administration sees an opportunity to support Iraq’s pro-business Prime Minister Mohammed Shia Al-Sudani in revitalizing the sector. “Two decades of American blood and treasure are in Iraq, and we shouldn’t forget that,” Pyatt noted. “Now the relationship is shifting into a new phase.”

US-China Competition

Pyatt underscored that developing Iraq’s energy system is also a chance to diminish China’s influence. “Unlike the Chinese, who may have other motives, our companies will only get involved where they see an asset and where there are options for recovery of capital,” Pyatt stated. China, already a key player in Iraq’s oil sector, secured bids earlier this year to develop 10 additional oil and gas fields. Iraq sends 35% of its crude oil to China, with trade between the two nations reaching $50 billion.

Despite China’s dominance, Pyatt said he is not concerned about which country ends up buying Iraq’s oil. “I don’t worry at all about the flag on the molecule. It’s a fungible and integrated market,” he said.

Strengthening Bilateral Relations

Over the last six months, the relationship between the US and Iraq has strengthened, with U.S. officials and major American energy companies, such as GE, BP, and Halliburton, holding several meetings with Iraqi counterparts. In October, the US Export-Import Bank (EXIM) announced a nearly $300 million deal with Iraq’s Ministry of Electricity to upgrade power plants. This initiative will raise Iraq’s power generation capacity by 40%, while reducing greenhouse gas emissions by over 31%.

Pyatt highlighted Iraq’s efforts to address gas flaring, a major contributor to emissions, stating, “There are huge opportunities under Al-Sudani to capture gas that’s currently vented at record levels.”

Climate and Energy Goals

In line with broader climate objectives, the US is working with Iraq to reduce its environmental impact. Iraq’s Minister of Oil, Hayan Abdel-Ghani, aims to eliminate gas flaring by 2028, a goal consistent with the Biden administration’s climate agenda. Additionally, Iraq plans to install rooftop solar systems on 500 public buildings, with $68 million set aside in the 2024 national budget.

While Iraq's oil production is expected to grow, Pyatt emphasized the need to minimize the carbon footprint of fossil fuel extraction. “We need to make sure we’re doing everything possible to reduce the climate intensity of the fossil energy that the world does produce,” he said.

The US remains committed to ensuring Iraq's energy development aligns with global sustainability goals, positioning American companies to play a central role in Iraq's future energy infrastructure.

Disclaimer: The views presented by the author do not necessarily reflect the official standpoint of Shafaq News Agency.