The start of full drilling operations just over a week ago at Iraq’s Akkas gas field -- led by U.S. oilfield services giant Schlumberger, along with the state-owned Midland Oil -- could signal far more than an overdue upstream milestone. Given the enormous strategic importance of the field in its geographic location, role in domestic power generation, and as a benchmark in the rollout of similar projects across the country, it may indicate growing momentum in Iraq’s shift towards the U.S. sphere of influence and away from that of China, Russia, and Iran. So is it a mark of a geopolitical realignment or merely a temporary tactical adjustment of the sort the oil markets have seen before in Iraq?
Discovered in 1992, the Akkas field has around 5.6 trillion cubic feet (Tcf) of proven reserves, with the new drilling operations being part of the initial fast-track production phase that targets a capacity of 100 million standard cubic feet of gas per day (scf/d), according to local news reports. Later phase developments will be aimed at increasing output to a target of 400 million scf/d, with the field to be integrated directly into Iraq’s domestic power system. It will supply the Anbar combined-cycle plant, the Akkas power station, and eventually feed into a national grid that has long relied on Iranian imports. In Baghdad’s own framing, Akkas is not simply another upstream project but the first major test case for a broader strategy to build a sovereign gas base capable of reducing external dependence and stabilising the country’s chronically fragile electricity sector.
Iraq’s longstanding dependence on neighbouring Iran for up to 40% of its power requirements (supplied through gas and electricity imports) remained a key impediment to any meaningful improvement in relations between Baghdad and Washington. The U.S. argued that it kept Iraq inclined to cooperate with Iran in multiple areas that damaged the interests of Washington and its allies -- most notably, by facilitating the continued export and monetisation of Iranian oil, disguised as Iraqi oil, that Tehran would use to fund its military proxies around the globe, and maintain its regime, despite decades of sanctions. The success of the Iran/Iraq sanctions-avoidance model, as analysed in full in my latest book on the new global oil market order, was partly due to the difficulty of telling apart Iraqi from Iranian oil in the fields shared by the two countries. Multiple major oil fields fit this mould, including Iran’s Azadegan oil reservoir (split into North and South fields) that is exactly the same reservoir upon which sits Iraq’s Majnoon oilfield. The same feature applies to Azar (on the Iran side)/Badra (on the Iraq side), Yadavaran (Iran)/Sinbad (Iraq), Naft Shahr (Iran)/Naft Khana (Iraq), Dehloran (Iran)/Abu Ghurab (Iraq), West Paydar (Iran)/Fakka/Fauqa (Iraq), and Arvand (Iran)/South Abu Ghurab (Iraq). Consequently, it remained extremely simple to rebrand Iranian oil as Iraqi oil and then ship it anywhere that Tehran wanted.
Once at the ports and ready for loading onto tankers, the documentation on the country of origin of the oil is easily changed to show that it came from Iraq and not Iran. Indeed, Iran’s own former Petroleum Minister, Bijan Zanganeh, publicly highlighted this very practice when he said in 2020: “What we export is not under Iran’s name -- the documents are changed over and over, as well as [the] specifications.” Onboard the tankers, the obfuscation of the true source of the oil could continue, with another reliable sanctions side-stepping technique being the disabling of the ‘automatic identification system’ on ships that carry Iranian oil. This makes tracking such vessels much more difficult. Compounding this – particularly useful for oil being moved to China -- is the common practice of at-sea or just-outside-port transfers of Iranian oil onto tankers flying the flags of a local Asian country, with Malaysia and Indonesia having long been favoured by Iran and Iraq in this regard, as also detailed in my latest book. So well-developed and effective did these methods become that they were a matter of great national pride for Iran, with its then-Foreign Minister, Mohammad Zarif, stating in December 2018 at the Doha Forum that: “If there is an art that we have perfected in Iran, [that] we can teach to others for a price, it is the art of evading sanctions.” Year after year, Baghdad would assure Washington that it would soon reduce such exports from its neighbour but that it needed waivers from the U.S. to keep doing so in the interim to maintain power across its grid. However, year after year the same pattern persisted.
This is where the broader significance of Akkas becomes clearer. Situated just short of the Syrian border, the field sat directly on one of the key transit routes used by Iran to move oil -- and anything else it wished to send -- toward the Mediterranean coastline. It was, for example, a critical node in Tehran’s long-planned ‘Land Bridge’ from Iran to the Mediterranean Sea, designed to exponentially increase the scale and scope of weapons deliveries into southern Lebanon and the Golan Heights area of Syria for use against Israel, as also analysed in depth in my new book on the new global oil market order. The strategic intent behind this corridor was to provoke a wider regional conflict that would draw in the U.S. and its allies into another unwinnable Iraq- or Afghanistan-style engagement. Before reaching the Syrian coast, Akkas also formed the western point of a skewed triangle across central Iraq, running from the Mansuriya field on the Iranian border, down to Siba near Basra’s export hub, and then west to Akkas itself. Located in the lawless expanse of Anbar province, it also served as a staging ground for Iran to organise and move insurgents across Iraq and into neighbouring states, operating along what the U.S. military once called the ‘spine’ of Islamic State -- the Euphrates corridor running west into Syria and east toward the Gulf.
It is little wonder that Russia and China had long sought to secure this triangle -- with Akkas at its core -- within their spheres of influence. For Beijing, the Akkas gas project was on the radar early as part of the broader ‘Iraq-China Framework Agreement’ signed in December 2021. Mirroring the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’ -- first revealed anywhere in the world in my 3 September 2019 article on the subject and fully examined in my new book on the new global oil market order -- the Iraq version granted China first refusal on all oil, gas, and petrochemicals projects that emerged in the country. It also allowed Beijing to build out corollary infrastructure around these projects, including dual-use airports and other logistical links. For Russia, Iraq remained a key component of the Shia Crescent over which Moscow projected influence across the Middle East. This reinforced the already powerful position it held in several Crescent states, including Lebanon and Syria, with Akkas serving as a principal entry point from Iraq into Russia’s then substantial military presence along the Mediterranean coastline.
For the U.S. and its allies, then, the start of drilling at Akkas is not confirmation of a full Iraqi realignment, but it is one of the most consequential indications in years that the strategic balance may be shifting. By opting for a major U.S. partner in the most geopolitically sensitive gas field in the country, Baghdad has shown a willingness to test a Western-aligned energy pathway at a time when the regional stakes are exceptionally high. Whether this evolves into a sustained pivot will depend on Iraq’s ability to deliver Akkas at scale, replicate its model across other fields, and withstand the inevitable counter-pressure from the powers that stand to lose. For now, though, Akkas stands as a rare moment of clarity in Iraq’s otherwise ambiguous foreign-policy posture -- a tangible step toward the U.S. orbit at precisely the moment when Washington and its allies are beginning to regain strategic traction across the region.
By Simon Watkins for Oilprice.com