Iraq's Sudani: US troop withdrawal does not mean end of security relationship

NEW YORK — Iraqi Prime Minister Mohammed Shia al-Sudani said in an exclusive interview with Al-Monitor on Wednesday night that Iraq is eager to do business with US companies as it seeks energy independence, adding that the country is ready to handle security without the US-led coalition.

“We are ready to enter into direct negotiations to benefit from all the opportunities available to develop oil, gas and petrochemicals,” said Sudani. 

The Iraqi premier spoke at a joint event hosted by Al-Monitor and the US Chamber of Commerce, which was held on the sidelines of the United Nations General Assembly. He addressed the annual forum on Thursday. 

Energy independence

Iraq plans to achieve energy independence by 2030. The country is one of the 10 largest oil producers in the world, accounting for around 4.4 billion barrels per day (bpd). However, Iraq lacks the capacity to refine enough oil for domestic use and imports some fuel as a result. 

Sudani lamented the fact that Iraq, despite its abundance of resources, continues to import oil and gas. 

“Iraq has not made use of its wealth in a proper manner,” he said.

Iraq receives much of its gas from neighboring Iran, an arrangement that requires US sanctions wavers, which have become a source of friction in US-Iraq relations.

Sudani discussed the Iraqi government’s efforts to achieve energy independence, pointing to the February reopening of the Baiji refinery, the opening of the Karbala oil refinery in 2023 and last year’s loan agreement with the Japan International Cooperation Agency to upgrade the Basrah refinery, among other examples.

Sudani added that some companies want to avoid “competition” from Chinese and other companies. China is active in Iraq’s energy markets, with Chinese firms managing two-thirds of the country’s oil production, according to a February report from S&P Global. 

There is no holdup on the Iraqi end to doing business with US firms, according to the prime minister.

“We are ready to go into partnerships in this particular field,” he said. 

Iraq announced plans in late August to offer 10 gas exploration blocks to American companies. The move followed Chinese firms winning seven out of the 10 oil and gas contracts offered during a round in May. No US energy giants were involved in the round, according to reports. 

Sudani said Iraq has a policy of “diversification” and does not seek to award all contracts to one country. According to him, some US companies have said the terms of potential contracts were not favorable. Sudani pledged to rectify the issue.

“I hope other corporations will take the initiative and show us where the problem lies,” he said. 

Since 2003, US energy companies have so far been reluctant to enter the Iraqi market, outside of the Kurdistan region, initially due to security concerns, but also because of what they have considered poor terms based on old-style technical service agreements that pay a flat rate for every barrel of oil produced after reimbursing costs — an approach that limits profits based on rising prices and expanded production.

Iraq has nonetheless recently signed energy deals with two key Western firms. Last month, British Petroleum signed a deal to develop oil and gas fields in the oil-rich Kirkuk province. Last year, France’s TotalEnergies signed a $27 billion deal to improve Iraq’s energy sector, including via a 1-gigawatt solar plant in Basra.

Sudani added that Iraq has made progress recovering gas flares, saying Iraq is now utilizing 69% of the gas that accompanies oil production, with a goal of capturing all of it by 2028.  Gas flaring occurs when natural gas reserves that are located near oil are burned instead of being used. Iraq has historically lacked the capacity to move the gas from oil production areas but has made efforts to rectify the situation in recent years.

US Secretary of State Antony Blinken met with Sudani on Monday, during which the diplomat “commended Iraq’s commitment to achieve energy independence by 2030.” 

Blinken additionally “emphasized the need to reopen the Iraq-Turkiye oil pipeline to encourage continued foreign investment in the Iraqi economy,” according to a State Department readout. 

US President Joe Biden raised the same issue in his meeting with Sudani in April.  Sudani, in his remarks Wednesday, claimed that Kurdish oil is being smuggled from the Kurdistan Region into Iran and Turkey. Blinken noted Iraq's smuggling problems with Iran from the south of the country in his meeting with Sudani this week.  

The Iraqi prime minister called for direct talks to resolve the issue of exports from the Kurdistan Region.

“We are ready to negotiate with the companies and the Kurdistan Regional Government,” he said. 

US withdrawal

Sudani reiterated Iraq’s desire for the US military to withdraw from Iraq, saying the pursuit is not driven by political considerations.

“It’s an important and precious opportunity to move from a stage of war and conflict to a stage of development and stability,” said the Iraqi premier. 

The United States and Iraq resumed talks over the US military presence in the country in July. Iraq has called for the withdrawal of the US' 2,500 troops and an end to the American-led international coalition to defeat the Islamic State (ISIS) in Iraq. 

On Friday, the US and Iraqi governments announced the coalition’s mission is scheduled to end next year.

ISIS lost its last Iraqi territory in 2017 but has remained active on a lower-scale since then. Iran-backed political actors in Iraq, including militias such as Kataib Hezbollah, have long called for the United States to leave. 

Sudani said that Iraqi forces have achieved a “high level” of security capability. He said ISIS remains a “security threat but not a threat to the security of the state.”

“It does not mean the end of the relationship,” said Sudani on the US withdrawal. 

Conflict in the region

Sudani said that Iraq is not seeking to be drawn into the regional spillover from the Gaza war. 

“I believe the government … has played a responsible role keeping Iraq away from that conflict,” he said. 

The Islamic Resistance of Iraq, an umbrella group of Iran-affiliated militias in the country, has repeatedly targeted Israel since the start of the war, including a drone attack against a port in Eilat on Wednesday. 

In late January, a drone attack on a US military outpost in Jordan resulted in the deaths of three American soldiers. The US blamed Iran-backed militias for the attack and struck their positions in Iraq and Syria in February. Baghdad condemned the US strikes as a violation of its sovereignty. 

Sudani acknowledged some “incidents” in Iraq since the start of the Gaza war, but said the domestic situation compares favorably with the situations in the Red Sea, Syria, Lebanon and Iran. 

“A stable Iraq in a sensitive region is a benefit to the world,” he said.