Iraq’s energy emergency: Kerosene shortages disrupt power and daily life

Shafaq News/ Iraq is facing a deepening kerosene crisis that threatens to cripple its electricity sector and disrupt daily life as winter approaches. Once considered self-sufficient, the country's energy production is now faltering under growing demand and dwindling supplies, with experts warning that the situation could escalate into an even greater disaster by next summer.

Surprising Crisis

The Iraqi Ministry of Oil had previously announced achieving self-sufficiency in kerosene oil and white oil since 2023. About a week ago, the ministry reported the export of 12,000 cubic meters of aviation gasoline from a refinery in Basra, according to oil and energy expert, Govand Sherwani. He noted to our agency, "These data indicate progress in refinery operations, which will soon enable the export of other derivatives, including gasoline, kerosene, and white oil."

However, the situation shifted dramatically with the onset of a surprising kerosene crisis at the beginning of October. Despite the Oil Products Distribution Company's October 12 declaration of no shortages in kerosene or kerosene oil production and distribution, consumers in several provinces reported significant shortages.

In response to the crisis, the ministry announced a shutdown of the Karbala refinery, which has a production capacity of 40,000 barrels per day (bpd), including kerosene oil and gasoline. “This shutdown exacerbated the crisis not only in kerosene oil but also in other petroleum derivatives,” as explained by Sherwani.

He further detailed, "Iraq is facing a gasoline crisis due to insufficient production, with daily output at only 26 to 27 million liters, while demand is estimated at 31 to 32 million liters.” The ministry anticipated achieving self-sufficiency in gasoline by the end of 2024 or early 2025. Nonetheless, the issue of kerosene oil was unforeseen, especially since imports stopped at the beginning of 2024.

Sherwani attributed this imbalance to “the heavy reliance on the Karbala refinery.” Despite starting trial operations in 2022—ten years after signing its construction contract in 2014—technical issues persist in the facility that the ministry claims was built according to global standards. “Thus, there is no justification for the frequent maintenance shutdowns at the most modern refinery in Iraq.”

Regarding the Baiji refinery, once the largest in Iraq with a production capacity of 300,000 bpd, Sherwani stated that it went out of service in 2014 but was rehabilitated in 2023. It is now expected to operate with a production capacity of 150,000 bpd. “If both the Baiji and Karbala refineries operate at their maximum production capacity without technical downtimes or distribution issues, there will be no crisis in petroleum derivatives, especially in kerosine oil,” he concluded.

Kerosene Shortages: Iraq's Electricity Roadblock

Economic researcher Ahmed Eid emphasized the challenges facing Iraq's electricity sector in an interview with Shafaq News Agency. He affirmed that "the Ministry of Electricity has begun operating power stations with Iraqi kerosene, which is produced in limited quantities that barely meet general needs, such as powering private generators and fueling vehicles and transport trucks."

Eid pointed out, "These quantities are insufficient; supplying the national power stations requires large amounts of kerosene. This necessitates a focus on increasing local production and investing in associated gas from oil extractions to ensure Iraq achieves self-sufficiency."

He further highlighted the implications of the current production limitations, explaining, “Operating national stations with local kerosene and extracting large quantities of kerosene derivatives have negatively affected citizens. This issue has become especially apparent as the strategic reserves of kerosene at the Ministry of Electricity have been depleted recently.”

Systematic Smuggling Operations

Iraq's ongoing kerosene crisis is not solely the result of supplying national power stations with kerosene and its depletion; it also involves systematic smuggling of petroleum products by influential parties to neighboring countries, particularly amid rising military tensions in the region and the recent Israeli attack on Lebanon.

Economic researcher Eid cautioned that “these activities have already led to substantial economic losses for Iraq, which could worsen if they continue unchecked.”

In turn, energy expert Sherwani affirmed that government subsidies have played a role in exacerbating the crisis. "Kerosene oil and petroleum derivatives such as gasoline are subsidized by the government and the Ministry of Finance, making their cost and price much lower than in neighboring countries like Syria and Turkiye,” he told our agency. “Therefore, it is not surprising that a portion of these derivatives is being smuggled to take advantage of the major price difference."

Sherwani further indicated, "There are reports of crude oil smuggling, and it is certain that derivatives are also vulnerable to smuggling operations, as they generate profits comparable to those of crude oil."

In light of these developments, the expert expressed hope that "the Ministry of Interior and security agencies would curb smuggling operations, especially for petroleum products," warning that failure to address the issue could lead to additional crises, particularly concerning kerosene, which is essential for public transport vehicles such as buses and trucks that transport goods. This situation, he stressed, would directly affect the movement of both goods and citizens within and outside cities.

Additional Factors

The kerosene crisis in Iraq has intensified due to multiple factors, as confirmed by Rafid Sadiq, the media manager at the Oil Products Distribution Company. The crisis peaked two weeks ago due to the periodic maintenance at the Karbala refinery, which halted a large part of daily production,” he stated in an interview with Shafaq News Agency. As a result, the company was compelled to transfer kerosene from northern regions, such as Baiji, to the central Euphrates areas and to operate on a priority basis to meet demand. Additionally, Sadiq mentioned that "residential generators were also supplied this month based on the national electricity supply rates."

Sadiq further noted, "There has been no pressure on fuel stations for the past four days," stressing that the supply continues through three channels: electricity stations, residential generators, and citizens. With the anticipated return of the Karbala refinery to operation by the end of October, he expressed optimism that conditions would normalize, enabling the supply of kerosene to all who need it and increasing stock levels in warehouses.

Earlier, Ali Shaddad, a member of the Parliamentary Oil and Gas Committee, elaborated on the crisis's root causes, reporting, "Last week, the Committee hosted both the Minister of Electricity and the senior staff of the ministry along with the general directors of the Ministry of Oil to discuss the kerosene crisis." Shaddad explained to Shafaq News Agency that "a large quantity of kerosene is being used by the Ministry of Electricity to operate some electric stations," noting that many of these facilities utilize more than one fuel type.

He also stressed the impact of geopolitical factors, mentioning," Iranian gas supply has decreased due to the international situation, and Iraq’s inability to pay its debts, caused by US sanctions on Iran, has further reduced import quantities.

The Committee member clarified that the Ministry of Electricity's stockpile of kerosene, which was previously 200,000 tons, has been exhausted. “Simultaneously, the Ministry of Oil's reserve, estimated at 600,000 tons, has also been depleted, leaving Iraq without any available stock of kerosene,” he added.

Kerosene Imports: Iraq's Urgent Solution

Iraq is preparing to import kerosene, with the first shipment expected to arrive on October 25 to replenish the strategic reserves depleted by the Ministry of Electricity, according to Shaddad. He described this development as "a negative indicator that may reflect on the situation of citizens in one way or another."

“Production from existing refineries is only marginally higher than consumption,” he clarified. "Production matches consumption, but the Ministry of Electricity's need for these quantities has led to a crisis in kerosene."

In this context, he criticized the decision-making process, asserting, "There are poorly studied and unprofessional decisions that indicate the weakness of advisors in the Council of Ministers.”

Shaddad concluded by highlighting the broader implications of these decisions, stating, "These choices have negatively impacted the performance of certain ministries and the lack of support for black oil factories. Consequently, this has adversely impacted the increase in reserves for black oil refineries at the expense of kerosene, affecting some refineries' operations by reducing production and necessitating maintenance."