Shafaq News/ Iraq is facing adeepening kerosene crisis that threatens to cripple its electricity sector anddisrupt daily life as winter approaches. Once considered self-sufficient, thecountry's energy production is now faltering under growing demand and dwindlingsupplies, with experts warning that the situation could escalate into an evengreater disaster by next summer.
Surprising Crisis
The Iraqi Ministry of Oil hadpreviously announced achieving self-sufficiency in kerosene oil and white oilsince 2023. About a week ago, the ministry reported the export of 12,000 cubicmeters of aviation gasoline from a refinery in Basra, according to oil andenergy expert, Govand Sherwani. He noted to our agency, "These dataindicate progress in refinery operations, which will soon enable the export ofother derivatives, including gasoline, kerosene, and white oil."
However, the situation shifteddramatically with the onset of a surprising kerosene crisis at the beginning ofOctober. Despite the Oil Products Distribution Company's October 12 declarationof no shortages in kerosene or kerosene oil production and distribution,consumers in several provinces reported significant shortages.
In response to the crisis, theministry announced a shutdown of the Karbala refinery, which has a productioncapacity of 40,000 barrels per day (bpd), including kerosene oil and gasoline.“This shutdown exacerbated the crisis not only in kerosene oil but also inother petroleum derivatives,” as explained by Sherwani.
He further detailed, "Iraq isfacing a gasoline crisis due to insufficient production, with daily output atonly 26 to 27 million liters, while demand is estimated at 31 to 32 millionliters.” The ministry anticipated achieving self-sufficiency in gasoline by theend of 2024 or early 2025. Nonetheless, the issue of kerosene oil wasunforeseen, especially since imports stopped at the beginning of 2024.
Sherwani attributed this imbalanceto “the heavy reliance on the Karbala refinery.” Despite starting trialoperations in 2022—ten years after signing its construction contract in2014—technical issues persist in the facility that the ministry claims was builtaccording to global standards. “Thus, there is no justification for thefrequent maintenance shutdowns at the most modern refinery in Iraq.”
Regarding the Baiji refinery, oncethe largest in Iraq with a production capacity of 300,000 bpd, Sherwani statedthat it went out of service in 2014 but was rehabilitated in 2023. It is nowexpected to operate with a production capacity of 150,000 bpd. “If both theBaiji and Karbala refineries operate at their maximum production capacitywithout technical downtimes or distribution issues, there will be no crisis inpetroleum derivatives, especially in kerosine oil,” he concluded.
Kerosene Shortages: Iraq'sElectricity Roadblock
Economic researcher Ahmed Eidemphasized the challenges facing Iraq's electricity sector in an interview withShafaq News Agency. He affirmed that "the Ministry of Electricity hasbegun operating power stations with Iraqi kerosene, which is produced inlimited quantities that barely meet general needs, such as powering privategenerators and fueling vehicles and transport trucks."
Eid pointed out, "Thesequantities are insufficient; supplying the national power stations requireslarge amounts of kerosene. This necessitates a focus on increasing localproduction and investing in associated gas from oil extractions to ensure Iraqachieves self-sufficiency."
He further highlighted theimplications of the current production limitations, explaining, “Operatingnational stations with local kerosene and extracting large quantities ofkerosene derivatives have negatively affected citizens. This issue has become especiallyapparent as the strategic reserves of kerosene at the Ministry of Electricityhave been depleted recently.”
Systematic Smuggling Operations
Iraq's ongoing kerosene crisis isnot solely the result of supplying national power stations with kerosene andits depletion; it also involves systematic smuggling of petroleum products byinfluential parties to neighboring countries, particularly amid rising militarytensions in the region and the recent Israeli attack on Lebanon.
Economic researcher Eid cautionedthat “these activities have already led to substantial economic losses forIraq, which could worsen if they continue unchecked.”
In turn, energy expert Sherwaniaffirmed that government subsidies have played a role in exacerbating thecrisis. "Kerosene oil and petroleum derivatives such as gasoline aresubsidized by the government and the Ministry of Finance, making their cost andprice much lower than in neighboring countries like Syria and Turkiye,” he toldour agency. “Therefore, it is not surprising that a portion of thesederivatives is being smuggled to take advantage of the major pricedifference."
Sherwani further indicated,"There are reports of crude oil smuggling, and it is certain thatderivatives are also vulnerable to smuggling operations, as they generateprofits comparable to those of crude oil."
In light of these developments, theexpert expressed hope that "the Ministry of Interior and security agencieswould 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 transportvehicles such as buses and trucks that transport goods. This situation, hestressed, would directly affect the movement of both goods and citizens withinand outside cities.
Additional Factors
The kerosene crisis in Iraq hasintensified due to multiple factors, as confirmed by Rafid Sadiq, the mediamanager at the Oil Products Distribution Company. The crisis peaked two weeksago due to the periodic maintenance at the Karbala refinery, which halted alarge part of daily production,” he stated in an interview with Shafaq NewsAgency. As a result, the company was compelled to transfer kerosene fromnorthern regions, such as Baiji, to the central Euphrates areas and to operateon a priority basis to meet demand. Additionally, Sadiq mentioned that"residential generators were also supplied this month based on thenational electricity supply rates."
Sadiq further noted, "There hasbeen no pressure on fuel stations for the past four days," stressing thatthe supply continues through three channels: electricity stations, residentialgenerators, and citizens. With the anticipated return of the Karbala refineryto operation by the end of October, he expressed optimism that conditions wouldnormalize, enabling the supply of kerosene to all who need it and increasingstock levels in warehouses.
Earlier, Ali Shaddad, a member ofthe Parliamentary Oil and Gas Committee, elaborated on the crisis's rootcauses, reporting, "Last week, the Committee hosted both the Minister ofElectricity and the senior staff of the ministry along with the generaldirectors of the Ministry of Oil to discuss the kerosene crisis." Shaddadexplained to Shafaq News Agency that "a large quantity of kerosene isbeing used by the Ministry of Electricity to operate some electricstations," noting that many of these facilities utilize more than one fueltype.
He also stressed the impact ofgeopolitical factors, mentioning," Iranian gas supply has decreased due tothe international situation, and Iraq’s inability to pay its debts, caused byUS sanctions on Iran, has further reduced import quantities.
The Committee member clarified thatthe Ministry of Electricity's stockpile of kerosene, which was previously200,000 tons, has been exhausted. “Simultaneously, the Ministry of Oil'sreserve, estimated at 600,000 tons, has also been depleted, leaving Iraqwithout any available stock of kerosene,” he added.
Kerosene Imports: Iraq's UrgentSolution
Iraq is preparing to importkerosene, with the first shipment expected to arrive on October 25 to replenishthe strategic reserves depleted by the Ministry of Electricity, according toShaddad. He described this development as "a negative indicator that mayreflect on the situation of citizens in one way or another."
“Production from existing refineriesis only marginally higher than consumption,” he clarified. "Productionmatches consumption, but the Ministry of Electricity's need for thesequantities has led to a crisis in kerosene."
In this context, he criticized thedecision-making process, asserting, "There are poorly studied andunprofessional decisions that indicate the weakness of advisors in the Councilof Ministers.”
Shaddad concluded by highlightingthe broader implications of these decisions, stating, "These choices havenegatively impacted the performance of certain ministries and the lack ofsupport for black oil factories. Consequently, this has adversely impacted theincrease in reserves for black oil refineries at the expense of kerosene,affecting some refineries' operations by reducing production and necessitatingmaintenance."