Despite Unsettled Bills
Iran to Maintain Gas, Power Sales to Iraq
Energy relations between Iraq and Iran have come under increasing
pressure from the US government, which has forced OPEC’s
second-largest producer to end a crude supply deal with its neighbor
Iran will continue exporting gas and electricity to Iraq even as Baghdad
owes Tehran at least $1 billion in gas bills, according to local media
Iran is also hoping to expand its export options to Iraq and diversify to
other regional countries as well, President Hassan Rouhani said April 7.
Iran’s crude oil exports have fallen sharply in the past six months, after
the US withdrew from the Iran nuclear deal and imposed sanctions targeting
its oil and gas sector in November.
“Our plan for exports of electricity, and connecting our electricity to
Iraq, and also gas ... will continue and in this regard we are ready to
facilitate very good connections [conduits] not only between the two
countries, but in the future with other countries in the region,” Rouhani
said in a televised briefing.
The Iranian President was joined by the visiting Iraqi Prime Minister, Adel
Abdul-Mahdi, who was accompanied by a ministerial and business delegation in
Tehran for a two-day visit.
Energy relations between Iraq and Iran have come under increasing pressure
from the US government, which has forced OPEC’s second-largest producer to
end a crude supply deal with its neighbor Iran.
The US is pressuring Iraq to turn away from Iran, promoting US businesses in
deals that will help Iraq wean itself off Iranian gas and power supplies.
But Iraq remains heavily reliant on Iran.
Iraq owes around $1 billion in gas bills to Iran, oil minister Bijan Namdar
Zangeneh said (April 7) after a meeting with his Iraqi counterpart Thamir
Ghadhban, state-run news agency IRNA reported.
In February, Zangeneh said Iran’s gas sales to Iraq worth more than $200
million a month.
Iran’s ambitious plans to sell its energy regionally are limited by US
sanctions. Washington issues periodic waivers for Iraq.
The US in March extended Iraq’s waiver for another 90 days for the country
to work out payment mechanisms for Iranian electricity and gas supplies that
do not violate sanctions.
Cutting the supplies would be devastating for Iraq’s economy and could lead
to further instability for the country, in light of regular summer power
Iraq’s Minister of Electricity Luay al-Khatteeb said Iraq would only need
Iran’s power supply for the next three years.
The two sides are working on a three-year cooperation agreement for more
“The contract for one-year extension of electricity exports to Iraq has been
signed. ... Iran is capable of exporting 1,500 MW of electricity to Iraq,”
Iran’s Energy Minister Reza Ardakanian said.
“The three-year agreement covers a variety of activities including
renovation of Iraq’s power plants, establishment of joint companies for
reparation and cutting power waste ... which is very huge in Iraq right
now,” he said.
Iraq recently paid $1 billion worth of Dinars to Central Bank of Iran to
settle its overdue energy debts, state television has reported.
“Given the gas and electricity exports to Iraq and the exports by the
private sector, right now our exports to Iraq value $12 billion,” Abdolnaser
Hemmati, the CBI Governor, told the state television.
Iran’s international banking relations are another target of US sanctions.
Imports from Iran account for nearly 30% of Iraq’s daily 14,000 MW
electricity consumption. Around 1.25 Bcf/d of gas is imported by pipeline,
feeding three power plants in Diyala and Baghdad provinces.
Another 350 Mcf/d is sent by pipeline to a power plant in Basra. Iraq also
sources 1,000 MW of electricity from Iran directly via transmission