As a vital member of the OPEC alliance, Iraq’s plentiful oil and gas reserves are well documented with multiple international actors keen to work closely with Baghdad to help secure their own energy supply.
Crucially, much of Iraq’s growing hydrocarbon revenue is now translating into essential investment designed to catalyse economic growth across the country, improving much outdated infrastructure throughout the Cradle of Civilisation.
Iraq’s government, led by Prime Minister Mohammed Shia’ Al Sudani, continues to explore numerous energy collaboration opportunities while also investigating ways to expand renewable energy investment to help tackle climate change.
The passing of the largest budget in the country’s history in June placed large-scale investment projects such as the $17bn Development Road and modernisation of Baghdad International Airport at the heart of the government’s priorities. Although the budget is heavily contingent on the price of oil, it is clear Baghdad can use record hydrocarbon revenues to help spur nationwide socioeconomic progress via large-scale projects while also seeking further foreign investment.
Following a visit by the Emir of Qatar in June, three Qatari companies (together with Iraq’s National Investment Commission) agreed to develop $9.5bn worth of projects in Iraq focusing on the construction of new power plants which are set to generate 2,400MW of much needed energy for Iraq’s growing population.
During the Emir’s visit, various economic collaboration opportunities were also discussed that would support Al Sudani’s plans for his administration to reconstruct public services and infrastructure.
Crucially, similar conversations have also been held with other regional partners including the UAE, Turkey and Saudi Arabia. With projects ranging from a new $1bn shopping district in Baghdad to a joint UAE-KSA $6bn investment in operations across the country, Iraq is now a nation attracting significant investment from regional neighbours as well as wider international partners, something that would have been viewed as virtually impossible even a few years ago.
Iraqis living in areas that have long suffered from underinvestment and the instability rendered by conflict are now seeing their calls for attention and improved public services answered.
With Iraq’s oil revenues in August surpassing $8.8bn according to the Iraqi Ministry of Oil, (marking the country’s highest monthly oil revenue of the year so far), the government will be hoping that such profits continue into the future.
While hydrocarbon production revenues are helping catalyse much needed investment in Iraq’s ageing infrastructure network, Al Sudani’s government also understands that a great emphasis on clean energy is required to sustainably support its growth ambitions.
Some large-scale energy collaborations may appear to solely be reliant on fossil fuels on the surface, but deals such as the $27bn joint venture with France’s TotalEnergies and Qatar’s QatarEnergy also place a great emphasis on the development of solar energy projects designed to tap Iraq’s vast renewables potential.
It is abundantly clear that Baghdad must continue investing in its energy infrastructure, its dominant revenue source. However, a focus on additional infrastructure projects including rebuilding schools and improving outdated transport hubs to support the country’s renewed education drive is also essential.
In this regard, other initiatives such as the government’s newly unveiled National Strategy for Education (2022-2031) which, amongst other things, prioritises the building of 250 schools, has been met with widespread applause including from World Bank officials.
Plans to further develop the country’s main airport with the International Finance Corporation (IFC) under a public-private partnership and bring its services ‘in line with international standards’ should also come as welcome news not just for Iraqis, but for international visitors including businesspeople.
Iraq is on a mission to reach its 2030 Vision for Sustainable Development and the government’s pursuit of economic diversification and foreign direct investment (FDI) combined with introducing greater private sector participation in key infrastructure assets in priority sectors is putting the country on a newfound path to prosperity.
With the passing of the record budget, Iraqis can expect further action designed to support them for decades to come. The question should not be will there be any further action or investment, but rather should be “I wonder what’s next?”