Iraq signs $450M deal with US firm for first floating LNG terminal

Shafaq News – Baghdad

Iraq has signed an agreement with US-based Excelerate Energy to build the country’s first floating terminal for liquefied natural gas (LNG) at the Port of Khor al-Zubair in Basra, a project both sides described as a key step in Iraq’s energy diversification plans.

The deal, signed at the Office of Prime Minister Mohammed Shia al-Sudani on Tuesday, covers the construction and operation of a floating storage and regasification unit (FSRU) with a daily capacity of 15 million cubic meters of gas. The unit will supply fuel to Iraq’s power stations through the national grid.

Iraqi energy officials said the terminal will receive, store, and regasify imported LNG to help stabilize the country’s electricity network, which has suffered from repeated disruptions caused by reduced Iranian gas imports due to sanctions and payment issues.

Excelerate Energy said the integrated project includes a five-year contract for LNG supply and regasification services valued at about $450 million, with an option to extend. The terminal will initially handle 250 million standard cubic feet per day (MMscf/d) of gas, expandable to 500 MMscf/d.

The company will deploy its newest regasification vessel, Hull 3407, now under construction by HD Hyundai Heavy Industries in South Korea. The vessel, among the largest of its kind, will have a storage capacity of 170,000 cubic meters and a regasification capacity of up to 1 billion cubic feet per day.

Operations are expected to begin in 2026 after construction and regulatory approvals are completed. Al-Sudani’s office said the floating terminal offers a “flexible option” with faster implementation and lower costs than fixed infrastructure, aiming to secure gas supplies for electricity generation and reduce reliance on imported pipeline gas.

The Prime Minister, who oversaw the signing ceremony, stressed that Iraq seeks to “consolidate political and economic stability through large-scale projects,” adding that energy remains a top government priority.

He noted that Iraq has set a timeline to achieve self-sufficiency in gasoline and gas production by 2028 and emphasized the importance of US partnerships to train Iraqi personnel and modernize the energy sector.

“This cooperation strengthens friendship based on shared interests in various fields,” al-Sudani pointed out during a meeting with US Deputy Secretary of Energy James Danly and Chargé d’Affaires Joshua Harris.

Danly considered the project reflects “notable progress in US–Iraqi cooperation,” especially in energy development. He added that Washington aims to support Iraq’s long-term energy independence and help it eventually export surplus power.

Excelerate Energy’s President and CEO Steven Kobos said the deal shows the company’s “strong commitment” to Iraq’s energy future and regional stability, describing it as the firm’s first fully integrated LNG terminal project in the Middle East.

“By combining terminal development, LNG supply, and operational expertise, we are helping Iraq secure reliable energy, diversify its fuel mix, and strengthen its long-term energy security,” Kobos explained.

Developed in coordination with Iraq’s Ministry of Electricity, the project marks Iraq’s entry into global LNG markets. Once operational, the Khor al-Zubair terminal will feed gas directly into the national grid, supporting power plants across southern provinces and potentially enabling regional exports.