Page 7 - MEOG Week 05
P. 7
MEOG PIPeLInes & transPort MEOG
Iraq looking at alternatives to Iranian natural gas
Iran/Iraq
ThE Spokesman of Iraq’s Electricity Ministry has said that Iraq is searching for alternatives to generate the electricity it needs, including devel- oping its own natural gas production, because Iran is now exporting only a fraction of the nat- ural gas agreed upon for the current year.
Speaking to Al Sabah newspaper, Ahmed al-Abadi said Iran is currently exporting only around three million cubic meters of natural gas to Iraq out of the agreed 25 million cubic meters quota for the current year.
According to an agreement signed between the two countries in 2011 Iran is obliged to deliver 50 million cubic meters of natural gas to Iraq per day. But Iran’s production is apparently not enough to satisfy domestic demand and meet the country’s full export commitments.
Iraq heavily relies on Iranian natural gas imports to fuel its power plants as its own resources have not been developed. In a country where the government has struggled for years to meet electricity and gas demand, an energy shortage can have serious political rami cations: blackouts and gas shortage can potentially fuel mass protests.
Baghdad could ease its energy dependency if it can find a contractor to capture natural gas ares from its oil elds, which are currently burned o .
Abadi said ministers have already met “to discuss alternative fuel sources and prepare the Ministry of Oil to ll the shortage that has occurred at production stations”.
Given the instability in sanctions-hit Iran, this gas shortage could become more acute. “It is possible that there could be further drops in
gas pumped for longer periods... this drop hap- pens every year, but the drop has been higher this year,” Abadi added.
Iran has struggled to recoup payments for its electricity and gas from Iraq since the US gov- ernment withdrew from the 2015 nuclear deal and re-imposed economic sanctions on Tehran, which e ectively cut Iran o from the global nancial system.
In February 2019, when Iran’s central bank governor Abdolnasser hemmati met with his Iraqi counterpart in Baghdad, they signed an agreement on a payment mechanism for Iraq to settle its dues, but due to payment issues resulting from U.S. sanctions over the past year Iraq has not been able to pay in dollars, and foreign-cur- rency-deprived Iran has not agreed to be paid in Iraqi dinars, which given the circumstances is the only possible way to settle these debts.
e last 90-day waiver that the United States has given to Iraq to continue purchasing gas and electricity from Iraq will expire in February when Iraq’s Commerce Bank has to stop any transactions with Iran.
According to Iran’s Oil Minister Bizhan Zan- ganeh Iraq now owes $2 billion to Iran for gas and electricity imports which it cannot pay.
While the tendering process to contract a rm to capture Iraq’s gas ares is still underway, Abadi said the government hopes for another waiver “due to Iraq’s urgent need for electricity”.
e US has long urged Iraq to wean itself o of Iranian energy imports. In a bid to diversify its sources of energy, Baghdad has been developing network connections with its wealthy Arab Gulf neighbours.
Week 05 05•February•2020 w w w. N E W S B A S E . c o m P7
