Shafaq News/ Iraq is capturing roughly 70% of its associated gas and plans to push that figure higher next year, a senior Oil Ministry adviser said on Sunday.
“The current investment reaches 2,000 million standard cubic feet per day (mmscfd) out of 3,000 mmscfd,” Abdul Baqi Khalaf told Shafaq News, adding, “of this, 1,000 mmscfd is used by the Oil Ministry itself for production and industrial operations, while the remaining 1,000 mmscfd is delivered to the Electricity Ministry to power generation stations.”
Despite the progress, Iraq still relies on up to 1,000 mmscfd of imported gas during economic stress, Khalaf noted, underlining the country’s vulnerability to supply disruptions.
“Gas capture will increase to 2,700 mmscfd next year,” Khalaf confirmed, explaining that this step is set to close the gap by advancing several projects in Basra and Dhi Qar provinces aimed at expanding gas processing capacity.
In 2023, Iraq captured 700.8 billion cubic feet of associated gas—roughly 60% of production—according to Deputy Oil Minister for Gas Affairs, Izzat Saber.
However, international data from the same year showed Iraq flared 636.8 billion cubic feet, contributing heavily to methane emissions.
Iraq has been under growing international pressure to end routine gas flaring, a major source of pollution and lost revenue, as it eyes energy independence and environmental compliance.
The monetary reform is biting and kicking and scratching but it's put in the position so that as soon as the gates are open, woo, everything just explodes!
That would be the contracts, all the investors that are being put in position so that once this blessing occurs boom!
Iraqi Prime Minister Mohammed Shia al-Sudani met with US Senators Angus King and James Lankford to discuss strengthening ties under the Iraq-US Strategic Framework Agreement.
Talks focused on boosting cooperation in the economy, energy, investment, and culture.
PM Sudani highlighted Iraq’s progress in the oil and gas sector, affirming it will pave the way for greater US investment - statement
: PM office
The video transcript highlights the critical challenge posed by the massive hoarding of cash outside formal banking channels in Iraq, with around 87-90% of the country’s currency supply held in homes rather than banks.
This situation undermines Iraq’s financial stability, economic growth, and modernization efforts.
Senior financial adviser Mazar Muhammad Sali emphasizes that this phenomenon is driven primarily by public distrust in banks, cultural and religious concerns, and the population’s unfamiliarity with formal financial services.
While the Iraqi economy has ample liquidity, banks remain liquidity-poor and ineffective. The public’s cash hoarding disrupts the income cycle and restricts investment opportunities, resulting in a stagnant economy despite the availability of funds.
To address this issue, strategic reforms are essential, including enhancing deposit insurance schemes to rebuild trust, promoting investment in government bonds, and accelerating digital financial inclusion through electronic payment systems. Such reforms aim to draw idle cash into the regulated financial system, enabling banks to support productive investment rather than relying on central bank foreign currency auctions for profit. However, the banking sector faces deeper challenges, including structural weaknesses, lack of modernization, corruption, restrictive legal frameworks, and a limited range of banking services primarily centered on government-related operations. Despite some progress in digital banking initiatives, infrastructure and regulatory systems remain insufficient, causing most Iraqis to favor physical cash over digital transactions. This entrenched “cash is king” mindset hampers the country’s financial sector development and overall economic modernization.
Highlights
💰 Up to 90% of Iraq’s currency is held outside the formal banking sector, vastly limiting financial circulation.
🏦 Public distrust, cultural factors, and religious concerns (like prohibition of usury in Islam) drive cash hoarding.
⚠️ Banks in Iraq are liquidity-poor despite the economy’s ample cash reserves, hampering investment.
🔒 Strengthening deposit insurance and clear communication are vital to restore confidence in banks.
📱 Digital financial inclusion and payment solutions are crucial to reducing cash hoarding behaviors.
⚖️ Iraq’s banking sector suffers from structural weaknesses, corruption, limited services, and weak legal protections.
🚀 Despite digital banking initiatives, lack of infrastructure and regulation slows progress and encourages cash use.
Key Insights
💡 Massive Cash Hoarding Undermines Economic Growth: The startling fact that nearly 90% of Iraq’s currency circulates outside banks exposes a fundamental obstacle to economic development. When funds remain idle in homes rather than channeled through the banking system, capital becomes unavailable for productive investments, limiting business expansion and government financing. This leakage disrupts the monetary flow crucial for economic vitality.
🤝 Public Distrust and Cultural Barriers Shape Financial Behavior: The population’s reluctance to engage with banks is rooted in both distrust and cultural-religious issues, including fears around usury prohibited in Islam. This signals that any reform must go beyond technical banking solutions and also address social and religious concerns through tailored communication strategies and trust-building efforts.
🏦 Iraqi Banks Lack Modernization and Viable Business Models: Most banks depend on foreign currency auctions by the Central Bank to generate income instead of providing diverse financial products or stimulating credit growth. This indicates a stagnant banking sector unable to support economic diversification or robust private sector financing, which prolongs Iraq’s economic underdevelopment.
🔐 Improving Deposit Insurance is a Key Trust Mechanism: Strengthening deposit insurance—to explicitly guarantee depositor safety in case of bank failures—and widely communicating these guarantees can significantly reassure the public. This can reduce the perceived risks that contribute to cash hoarding and encourage people to deposit funds within banks.
📲 Digital Financial Inclusion is a Game-Changer: Implementing electronic payment systems and encouraging digital banking can fundamentally alter Iraq’s financial landscape. Digital inclusion would make banking more accessible and convenient, reduce physical cash dependency, and foster transparency while integrating more people into the formal economy.
⚖️ Regulatory and Legal Weaknesses Hinder Banking Progress: Outdated, restrictive regulations and poor legal protections create an environment where banks cannot innovate or extend long-term credit effectively. Moreover, allegations of corruption and weak enforcement erode public confidence and prevent Iraq’s banking system from aligning with international standards.
🚫 Cash “King” Mentality Slows Modernization Despite Potential: Despite the Central Bank’s initiatives for digital enrollment, most Iraqis convert their digital earnings back into cash, indicating a deep-rooted preference for physical money. This behavioral pattern fosters continual liquidity bottlenecks within banks and stalls Iraq’s broader financial modernization, reducing the potential economic dividends of digital finance.
This comprehensive overview underscores the multifaceted nature of Iraq’s banking challenges. Tackling them requires coordinated efforts to rebuild trust, modernize regulatory frameworks, leverage technology, and address cultural-economic dynamics concurrently to unlock the country’s economic potential.
The State Company for Oil Projects (SCOP)has completed a major horizontal directional drilling (HDD) operation to lay a 42-inch gas pipeline beneath the Tigris River in the Sayafiyah area, as part of the Mahmudiya-Bismayah project.
The crossing spans 600 metres in length and reaches a depth of 22 metres, making it the longest and most significant crossing in the project. It was executed by Baghdad Projects Directorate, the team assigned to carry out the drilling operations.
Ali Ward Hamoud, Director General of SCOP, described the project as a key component of the government programme to supply power stations with essential natural gas. The initiative is receiving direct oversight from Prime Minister Eng. Mohammed Shia' Al-Sudani and field supervision by Deputy Prime Minister for Energy Affairs and Minister of Oil, Eng. Hayan Abdulghani Al-Sawad.
Hamoud highlighted the company's technical competence in executing strategic infrastructure projects to international standards, on schedule, and with full adherence to occupational health and safety regulations.
