Iraq eyes nuclear to meet electricity shortage

London, (Quantum Commodity Intelligence) – Iraq, the world's sixth biggest oil producer, is planning to build eight nuclear power plants to close the gap between electricity supply and demand, newswire Bloomberg reported last week.

The country, which produced around 4 to 4.5 million bpd of crude oil in 2020, is seeking to install the power plants over the next decade, although plans are at an early stage, the newswire said, with neither financing nor technical advice in place.

Citing an interview with the chairman of the Iraqi Radioactive Sources Regulatory Authority – Kamal Hussain Latif, Bloomberg said Iraq will seek $40 billion in financing to build 11 GW of capacity and has been in talks with Russian and Korean partners.

Iraq's electricity demand is expected to peak in the summer months at around 30 GW and exceed supply this year of 22 GW as air-conditioning is ramped up, a dynamic that has previously sparked protests in the country due to power cuts.

While Iraq does still use crude oil in some power stations to alleviate the demand, this has decreased sharply in recent years as supplies of natural gas from Iran have replaced it in the generation stack.

However, that supply ground to a halt last year due to a dispute over unpaid bills, after crude oil prices collapsed and left the country with a significant budget shortfall.

As such, any increase in capacity is unlikely to lead to significant impact on exports of crude, particularly given that power demand shortfall is expected to exceed any additional capacity brought online via nuclear supply and the country is seeking to build additional solar capacity.

Its finances, however, have been strained.

Earlier this year, the country was seeking long-term buyers for its crude oil, with upfront payment in a bid to ease its budget crisis.

In March, Iraq's parliament passed its 2021 budget, outlining expectations for an oil price of $45/b.

Benchmark crude Brent is trading at $73/b, although Iraqi grades, being heavier and more sour, trade at a $1-3/b discount to the lighter, sweeter international price.

Iraq's breakeven budget price for crude oil is about $71/b.

Iraq's nuclear agency has selected 20 sites for the reactors.