ERBIL, Kurdistan Region of Iraq - Iraq’s electricity ministry said Sunday that war-related instability in the region could disrupt a planned floating liquefied natural gas terminal at Khor al-Zubair port, a key project being developed by the US-based Excelerate Energy to support the country’s power sector.

In October, the firm and the Iraqi government signed a $450-million contract to build the terminal off the coast of Basra, with the US Embassy in Baghdad describing the initiative as "a decisive step toward achieving Iraq's energy independence from Iran."

The ministry on Sunday said it is concerned that “ongoing procedures to implement the terminal project could be affected because of the closure of the Strait of Hormuz,” noting the facility “needs a safe maritime passage” for shipments traveling from South Korea to Iraq.

It said the project also requires secure sea access for the vessel to dock and begin civil works.

The ministry added that “regional conditions and the consequences of war have greatly affected” imported gas supplies, saying current volumes do not exceed 15 million cubic meters per day.

That is far below the nearly 50 million cubic meters needed for power plants that rely on imported gas, it said.

“With this shortage, power stations are affected and their production is determined accordingly,” the ministry said in a statement carried by Iraqi state media.

It added that domestic gas supplies have also fallen because of limited oil production and exports, saying associated gas output has been hit by the wider regional crisis.

A floating gas terminal is a ship- or barge-based facility that produces, liquefies, and stores gas from offshore fields.

"The floating platform represents a flexible option in terms of implementation and related infrastructure, offering a quick solution to gas-related issues, as it can be executed in record time and at a lower cost compared to fixed platforms," the Iraqi prime minister's office said in October.

The terminal was designed to import liquefied natural gas with a daily capacity of 15 million cubic meters under a renewable five-year term to supply power plants and stabilize the electricity grid.