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The Middle East conflict has blocked Iraq’s plans to import gas via its first offshore terminal, which could aggravate power shortages during the peak summer season.
The start-up of Iraq’s first LNG import terminal, planned to be based at the Port of Khor Al Zubair in the Gulf, has been delayed until 2027 due to the conflict between Iran and the US-Israeli alliance, according to Western media reports.
Work on jetty reinforcement and fixed terminal infrastructure has experienced temporary setbacks, pushing the startup date back from the previously expected third quarter of 2026, the reports said, citing a statement by the US-based Excelerate Energy.
In October 2025, the NYSE-listed company had signed a binding commercial agreement with the Iraqi Ministry of Electricity for the project, which includes a five-year LNG supply and regasification agreement with renewal options and a minimum offtake commitment of 250 million standard cubic feet per day (MMscf/d).
The floating LNG import terminal, designed to accommodate a guaranteed 500 MMscf/d of regasification capacity, was expected to cost approximately $450 million all inclusive.
The reports cited the company as saying the project’s long-term outlook remains unchanged, pointing to Iraq’s persistent electricity shortages and limited domestic gas processing capacity as major factors sustaining demand for imported LNG.
“We are revising our full-year guidance to reflect the delayed startup of our Iraq terminal due to the ongoing conflict in the Middle East, mitigated in part by the expected interim deployment of the Excelerate Acadia to Jordan,” the company said in its first quarter 2026 results statement.
In May 2026, Excelerate executed a nine-month time-charter party agreement with Jordan’s National Electric Power Company (NEPCO) to deploy the Excelerate Acadia FSRU to the country’s existing LNG Terminal in Aqaba.
Iraq work resumption
Excelerate said construction work on the Iraq project would resume once regional conditions permit, noting that recent developments have underscored Iraq’s need for reliable and scalable LNG infrastructure.
“Iraq’s focus now is how to export its crude oil following the closure of Hormuz Straits…getting gas is not a major problem now and it could come later,” said Nabil Al-Marsoomi, an economics professor at Basra University.
“Gas could still come from Iran while LNG via that terminal could be received from Oman or Qatar once its gas facilities are repaired,” he told Zawya Projects.
Iraq has not ruled out importing LNG from other countries including Oman and Algeria, but analysts believe Qatar is the most likely given its proximity to Iraq, its massive LNG output and the fact they maintain strong relations.
Excelerate had said early this year that it was planning to install the floating unit in mid-2026.
Iraq had approved the project after a sharp fall in gas supplies from Iran and the government’s failure to agree a supply deal with Turkmenistan.
“I know that Iraq is determined to import LNG to offset the halt of Iranian supplies … I assume Qatar is the most practical supplier,” said Walid Khaddouri, an Iraqi energy analyst and former information director at the Arab Energy Organisation.
Iraq’s caretaker prime minister Mohammed Al Sudani visited Oman in September 2025 to discuss gas imports and other investments. Iraqi officials also spoke about a possible project to build a pipeline to export Iraqi crude to global markets through Omani ports outside Hormuz.
Iraq, OPEC’s second largest oil producer, controls more than 3.5 trillion cubic metres of natural gas but most of the reserves have remained untapped due to lack of investment.
(Reporting by N Saeed; Editing by Anoop Menon)
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