EU-Iraq energy deal taking shape

The EU is finalising a new energy deal with Iraq following a visit by Nouri al-Maliki, the country’s prime minister, to Brussels this week. The agreement is part of EU efforts to diversify its energy supply, but there are doubts about how much the EU can realistically decrease its dependence on Russia. 

There is “very good news of progress in talks” between the EU and Iraq, “so we can very soon establish a memorandum of understanding on energy cooperation,” European Commission President José Manuel Barroso told journalists following a meeting with al-Maliki on 16 April.

A memorandum of understanding could be signed within weeks, Barroso said. 

In a separate meeting with EU Energy Commissioner Andris Piebalgs, Iraq’s oil minister Hussain al-Shahristani also pledged to supply Europe with five billion cubic metres (bcm) of natural gas annually, which could be delivered via the EU’s planned Nabucco pipeline (EURACTIV LinksDossier). 

The agreements with Iraq follow a pledge made last week by Turkmenistan to supply the EU with 10 bcm of gas annually (EURACTIV 15/04/08), and are seen as part of a wider effort to diversify the EU’s gas supply in order to wean the bloc off its dependence on Russian gas.

But the amount of non-Russian gas the EU can likely secure in the coming decades is “very, very small”, Kieren McNamara of the International Energy Agency (IEA) told EURACTIV. In addition, new information has emerged that Gazprom is investing more in supply-side infrastructure, McNamara said. Such moves would allay earlier concerns expressed by the IEA that Russia is not making sufficient investments in new gas and oil fields (EURACTIV 01/02/08).

The Kremlin is also set to implement new laws that will require the capturing (rather than flaring) of gas during the extraction of oil, according to McNamara. Up to 60 bcm of gas could be obtained annually in this way, significantly more than the total amount of gas the EU can hope to obtain from Iraq and Central Asia combined, he said. 

The EU currently relies on Russia for 42% of its gas supplies, and there are growing public concerns about the threat of the Kremlin leveraging its position as the dominant supplier in order to ‘blackmail’ the EU for political purposes. 

But pushing for EU energy security without giving a central role to Russia would be a “big mistake”, both politically and from an energy market perspective, says Thomas Gomart, head of the EU-Russia programme at the Institut français des relations internationales (IFRI). The EU “cannot avoid Russia,” he said.

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