Iraqi oil crosses the borders: Iraq expands into the European market through Greece

Translated by Alessandra Fumagalli 

Ukraine’s war casts a shadow over the European energy transition, increasing the dependence on gas and oil in different countries of the world. Also Greece, even with its low energy consumption, has been influenced by this issue. In 2021, 82% of its energy needs was made up of fossil fuels, while renewable sources were only 17%. The dependence on imported natural gas has increased, going from 68% in 2010 to 74% in 2021. The main supplier was Russia. 

However, due to the outbreak of the war in Ukraine, Greece started a diversification of its energy sources. Beside the Russian imports, Greece started receiving gas also by Turkey and Azerbaijan through gas pipeline, reducing its dependence on Russia. US were the main liquefied natural gas supplier(LNG), followed by Algeria and Qatar. 

Moreover, Iraq is gaining relevance in the Greek energy market, becoming the second oil supplier after Kazakistan and before Russia. In 2021, Iraq met 30% of its energy needs and in 2022 its exports towards Greek were about 6,27 billion dollars, strengthening its position in the European energy market. 

Greece’s energy demand 

Greece played an important role in the gas race since 1990s, led by energy politics, climate change and geopolitical ambitions that would have placed Greece as energy hub for South-East Europe. 

In the last years, the demand of natural gas has increasingly grown, especially as far as the electricity production is concerned, that has replaced the lignite, one of the fossil fuels in the energy mix. Between 2005 and 2021, its share grew from 14% to 40%, while lignite’s one decreased from 59% to 10%. Also renewable sources significantly increased, contributing to 41% in the energy mix.  

In 2021, about 69% of natural gas imports, that were about 4,2 billion cubic meters, were used to produce electricity. Industry used only 12,5%, while families used around 19%. 

Imported oil accounts for about half of Greece’s energy mix, with the transportation branch using about 44% of it. Oil products derived from imported crude oil represent the main export sector of the country, exceeding twice the volume of products consumed domestically in 2021, with a value of more than 10 billion euros.

Despite the high number of fossil fuels exports, Greek energy and climate politics were signed in the National Energy and Climate Plans (NECP) in 2019, which put the basis for the climate’s law in May 2022. European Recovery and Resilience Facility (RRF) established other goals, including more than 10 billion euro for the green transition and for the “Zero Net Emissions” goal by 2030. Most measures were adopted due to an emergency legislation in July 2022, with key goals including the increase in the share of renewable energy to 35% of gross final consumption by 2030 and reducing greenhouse gas emissions by 55 percent over the same time frame.

Iraq’s oil offer

Iraqi energy sources, including oil, gas and solar energy, are rapidly emerging as key point in the energy global view. Iraqi government thinks that by six years, Iraq will be one of the main oil global producer, while by 2030 Iraq will have solar energy as 5% of its energy mix. 

These improvements placed Iraq as a potential oil and gas supplier for Europe, with recent investments in the energy sector, aiming at reducing the dependence on external supply and exploiting gas sources for the production of electricity. For example, the construction of the gas processing plant in the Halfaya oil field, scheduled for this year, marks an important step towards this goal. This project, carried out by China Petroleum Engineering & Construction Corporation on behalf of PetroChina highlights the growing interest in the international investors in the Iraqi energy sector. 

Iraq wants to become a significative energy supplier for Europe, trying to fix the continent’s energy deficit. However, in order to reach this goal, the country has to face different challenges, including the local political instability, regional geopolitical tensions and the terrorism threat. The political stability and international cooperation will be crucial for Iraq in realizing its energy potential and becoming an affordable partner for Europe. 

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