US LNG developer Excelerate Energy has begun dredging work on its floating storage and regasification unit (FSRU) for Iraq, the company announced in its second quarter report on August 5.

A project update revealed that engineering and procurement activities are almost finished and that the Middle East conflict between the US, Israel, and Iran has not hindered development of the country’s first LNG import terminal.

With engineering work almost finished, dredging activities and site clearance are underway for the FSRU, which will come with a price tag of $450 mn.

Excelerate inked a five-year deal for LNG supply and regasification services with a subsidiary of Iraq’s Ministry of Electricity in October 2025. An extension option is also available.

Under the terms of the deal, Iraq will purchase a minimum of 250 mn standard cubic feet (7.1 mn cubic metres) per day. The FSRU will boast a regasification capacity of 500 mn standard cubic feet (14.2 mn cubic metres) per day.

Excelerate’s newest FSRU, Hull 3407, will be deployed at the Port of Khor Al Zubair, about 50 km south of Basra, bordering both Kuwait and Iran. The FSRU is currently under construction in South Korea.

Baghdad is in the midst of attempting to diversify its energy supply and reduce dependence on gas imports from its neighbour, Iran, particularly since US sanctions have disrupted flow of supply.

Iraq will transport the regasified fuel through pipelines and integrate it into the national energy grid.

Amid Washington’s threats to block Iraq’s electricity imports from Iran, Iraq had previously considered importing LNG from Gulf suppliers Oman and Qatar.

Baghdad first opened talks with Excelerate in June 2025, when it received a handful of offers for its tender to procure cargoes of the super-chilled fuel. It then relaunched the tender in August, before selecting Excelerate in October.