In a move that’s turning heads across the global energy sector, Iraq has announced plans to completely stop importing natural gas from Iran by 2028 — a deal worth a staggering $4 billion a year. The reason? Iraq has finally realized it’s been sitting on a hidden goldmine this whole time… and it’s been burning it.
This decision isn’t just about energy policy — it’s about independence, billions in savings, and a race to reinvent a broken system before the clock runs out.
Why Iraq Has Been Paying Iran Billions for Gas
Let’s get straight to it: Iraq is one of the world’s top oil producers, yet it still imports most of its natural gas to keep the lights on. For years, Iran has been Iraq’s go-to supplier, sending billions of cubic meters of gas across the border annually.
That gas is used to power Iraq’s grid and fill in massive electricity shortfalls. And it doesn’t come cheap — $4 to $5 billion a year in payments, often complicated by political tensions and U.S. sanctions.
So why import gas when Iraq produces so much oil?
The Billion-Dollar Mistake Hiding in Plain Sight
Here’s the twist: Iraq has all the gas it needs — but it’s been burning it.
Oil production releases large amounts of associated gas as a byproduct. Instead of capturing it, Iraq has been flaring it — setting it on fire and wasting it into the atmosphere.
This flared gas is worth up to $5 billion a year — the same amount the country spends importing gas. It’s been a literal bonfire of opportunity, going on for decades.
But now, things are changing fast.
Iraq’s 2028 Plan: Turn the Waste into Wealth
The Iraqi government has announced a high-stakes goal: end all natural gas imports from Iran by 2028 and replace them with gas captured from oil fields that is currently flared.
To do that, Iraq has started signing deals with international energy companies to build the infrastructure needed to capture, process, and utilize its own gas. Think gas-processing plants, storage facilities, pipelines — everything it needs to take control of its energy destiny.
Why This Is a Game-Changer
If Iraq pulls this off, it stands to:
- Save up to $4 billion a year
- Strengthen national energy security
- Reduce dependency on politically sensitive imports
- Create jobs through local production
- Drastically cut air pollution and carbon emissions
Yes, ending flaring isn’t just smart economically — it’s a huge environmental win. Iraq is currently one of the world’s top gas-flaring countries, emitting harmful greenhouse gases daily. Capturing and using this gas instead of wasting it will also help meet international climate goals.
The Clock Is Ticking: Can Iraq Deliver?
This plan won’t be easy.
To meet the 2028 target, Iraq must overcome:
- Years of underinvestment in energy infrastructure
- Political instability that scares off foreign partners
- Corruption and red tape slowing down development
- Security risks around key energy sites
And let’s not forget the tight timeline. Just 3 years remain to turn a decades-old practice into a sustainable solution.
But Iraq isn’t going it alone. With foreign investment flowing in, and companies seeing the untapped value in capturing flared gas, momentum is building.
The Global Impact: A New Iraq Energy Story?
This move could position Iraq as a leader in responsible energy reform. While many countries are scrambling to find cleaner, more affordable energy sources, Iraq is turning waste into power.
It’s a powerful example of how even long-time oil economies can pivot toward smarter, greener solutions without sacrificing energy security.
In time, Iraq could even go from importer to exporter — flipping its role in the region and using its natural resources more strategically.
So, What Happens Next?
The next 12–24 months are crucial. Iraq’s ability to:
- Finalize deals with foreign investors
- Rapidly build out infrastructure
- Maintain political will and public support
…will determine whether this bold promise becomes reality — or just another ambitious headline.
But for now, Iraq’s declaration to ditch Iranian gas and embrace its own energy future is one of the biggest energy shakeups in the Middle East in years.
Iraq’s $4 billion gas divorce from Iran is more than a budget move — it’s a bold declaration of independence. And if they get it right, it could light the way to a cleaner, wealthier, and more self-reliant Iraq.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.