The Multi-Billion Dollar Relationship: The New Chapter in Kurdistan-U.S. Relations

Dr. Mohammed A. Salih, Foreign Policy Research Institute

In a bold recalibration of energy politics in Iraq, the Kurdistan Regional Government (KRG) has aligned itself with the Trump administration's commerce-driven foreign policy through a pair of newly signed natural gas deals with U.S. firms. The message from KRG Prime Minister Masrour Barzani is clear: Erbil is no longer content playing a secondary role in Iraq's energy landscape. The KRG is asserting itself as a strategic energy player with the capacity not only to meet its own needs but to help pull Iraq away from its chronic reliance on Iranian gas. This is not a new ambition for the KRG, but it has gained fresh momentum as a result of the shift in regional dynamics since October 2023 –– and President Trump’s return to office.

Announced on 19 May, the agreements involve HKN Energy and WesternZagros, two U.S.-energy firms, entering production-sharing contracts to develop the Miran and Topkhana-Kurdamir gas fields in Sulaimaniyah province. Signed during Barzani’s visit to Washington last week, these deals represent a major step toward unlocking Kurdistan’s vast natural gas potential — estimated at 25 trillion cubic feet. That volume, according to some accounts, places Kurdistan among the world’s top ten reserves. So far, only the UAE-based Dana Gas has been producing gas in Kurdistan, operating the Chamchamal and Khor Mor fields, which together hold 5.3 trillion cubic feet in proven reserves.

What makes these deals historic is not just their economic scale — expected to generate over $110 billion in lifetime revenue — but also Washington's unprecedented backing. This appears to be an indication from the Trump administration that it is ready to support and empower its allies, even if that agitates Baghdad and Iran. A statement from the U.S. State Department noted that these partnerships "will strengthen gas production in Iraq and benefit both of our peoples." Secretary of Energy Chris Wright echoed this sentiment on May 22, brushing aside Baghdad's objections and stating, "We are very keen to work with and support the people of the Kurdistan region to turn their endowments underground into resources."

For Kurdistan, this is a major leap: it has established itself as a profitable frontier for U.S. business and a potential energy engine for Iraq. The Miran field alone contains up to 8 trillion standard cubic feet of recoverable gas. Initial production, expected to begin within 20 months, will reach 50 to 70 million scf per day. The Topkhana-Kurdamir block holds another 5 trillion scf and 900 million barrels of recoverable gas and crude. WesternZagros projects up to $70 billion in revenue from this site.

This shift coincides with a regional environment increasingly favorable to economic cooperation. Unlike previous U.S. administrations, which often treated KRG energy deals as legal irritants, the Trump administration appears to have embraced them as cornerstones of its commercial diplomacy. The KRG has deftly capitalized on this by positioning itself as a reliable U.S. partner that is willing to take risks and act with initiative.

Erbil’s push is not just about geopolitics — it is also about meeting pressing domestic needs. Kurdistan produces 650 million cubic feet of gas a day, which falls short of powering its full electricity output. As Acting Natural Resources Minister Kamal Mohammed put it, “We produce more than 8,000 MW, but our gas can only cover about 4,500 MW”, leaving the region exposed to blackouts, especially during the sweltering summer months.

Amid the KRG’s efforts, Baghdad remains a key obstacle for the KRG. Just days after news of the energy deals surfaced, the Iraqi Ministry of Oil, on May 20, denounced the agreements as a “flagrant breach” of Iraqi law, citing the 2022 Federal Supreme Court ruling that nullified any KRG contracts not approved by the federal government. Following Baghdad’s statement, the State Department Spokesperson Tammy Bruce reiterated U.S. support, stating "We support these deals, and we have encouraged Baghdad and Erbil to work together to get gas production to commence as soon as possible." The KRG’s Natural Resources Ministry insists the deals with HKN and WesternZagros are “legally sound and fully aligned with the Kurdistan Region’s constitutional rights.” It emphasized these are not new contracts but modifications to existing ones—arrangements that Baghdad, in principle, recognizes under the 2025 federal budget law.

Tapping into Kurdistan's reserves, however, should not be viewed as a threat to Iraq’s unity; it is a lifeline for its energy security. Higher gas production rates in Kurdistan could help Iraq gradually reduce its reliance on Iranian energy imports, which have become increasingly unstable. Under existing contracts, Iraq is entitled to import up to 45 million cubic meters of natural gas from Iran to fuel its power plants. But, due to domestic electricity shortages in Iran, Iranian gas exports to Iraq have plummeted by roughly half in recent months. This disruption has deepened Iraq’s own energy crisis — especially after the U.S. revoked sanctions waivers that had allowed Iraq to import around 1,200 megawatts of Iranian electricity. Combined, these setbacks appear to have slashed Iraq’s overall electricity production by about one-third, leaving Baghdad generating only around 27,000 megawatts to meet a national demand of roughly 40,000 megawatts. Hence, energy self-sufficiency will not only ease the pressure on Baghdad but create a more integrated and functional national grid — something Iraq has long struggled to build.

In an effort to alleviate Baghdad’ concerns, Prime Minister Barzani has pointed out Kurdish energy deals should not be viewed as a threat by Baghdad. The agreements indeed present a real opportunity for a three-way win—for Kurdistan, Iraq, and the U.S.—by advancing energy self-sufficiency for both Erbil and Baghdad, while also deepening U.S. engagement and strategic interests in Iraq.

The bigger picture is this: Kurdistan is asserting its energy potential not at Iraq’s expense, but for Iraq’s future as a whole. These deals offer a path toward energy self-sufficiency, stronger U.S.-KRG ties, and a more stable electricity grid for all Iraqis as the KRG currently provides both natural gas and electricity to parts of Iraq. Amid the more favorable political climate abroad, it is important to note that for the KRG’s energy strategy to succeed, foreign support alone will not be enough. The KRG must also secure public trust. The energy sector has long faced criticism from opposition groups and citizens alike for its lack of transparency. Erbil must ensure the revenues from these projects translate into reliable, affordable energy for residents. Initiatives like the Runaki (Light) program, which aims to deliver 24/7 electricity, should be prioritized and linked directly to gas resources and revenues.

Equally important is ensuring that the benefits of these deals reach low-income families and small and medium size businesses. Natural gas should not be just another commodity sold abroad and should become a cornerstone of sustainable local development. Access to affordable and reliable electricity and home gas supplies should be a key component of that effort. Without it, frustration will grow, and the legitimacy of the energy sector’s transformation will come under further question.

There is also a strategic regional angle to consider. These energy partnerships position Kurdistan as a crucial energy corridor linking Iraq to Turkey and Europe. As Europe scrambles to diversify away from Russian gas, and Turkey eyes new sources to meet its surging demand, Kurdistan is geographically and commercially well-placed to meet part of this need.

Dr. Mohammed A. Salih is a Non-Resident Senior Fellow in the Foreign Policy Research Institute’s National Security Program. He has two decades of experiences writing on Iraqi, Kurdish, and regional affairs in various capacities as a journalist, analyst and scholar. He is available on X @MohammedASalih