Page 5 - DMEA Week 01 2021

DMEA COMMENTARY DMEA

from Iran, with the combination accounting go-ahead by American authorities to transfer
for around a third of the country’s peak winter $244mn to buy coronavirus vaccines from the
demand of around 35,000MW. WHO’s COVAX alliance. It also emerged that
While over-reliance on Iran is nothing new, it Baghdad would export 700,000 tonnes of barley
has come into greater focus in recent months as to Iran for $125 per tonne as part of the as part of
Iraq’s neighbour races to develop its gas reserves the repayment plan with cash and other goods to
in order to cater to strong demand. be used in a partial barter arrangement.
As on previous occasions, the reduction
was blamed on Baghdad’s unpaid bills for gas Shortages
supplies. However, Iran has struggled to cover Around 95% of Iran’s population is connected to
domestic demand this winter and that situa- the country’s gas grid and it is among the world’s
tion was exacerbated by a pipeline explosion in top five gas consumers, with demand peaking at
December which took around 15mcm per day of the end of the year.
gas from the South Pars field offline. In November, it emerged that Tehran had
resorted to tapping gas storage facilities as
Finances demand outstripped supply, with output run-
In July 2021, gas supplies from Iran dropped ning at around 1.27bcm per day from South
by 19mcm per day, reducing Iraqi capacity by Pars, other gas fields and flows associated with
1,000MW. Exacerbating the situation, trans- oil production.
mission lines in the Iraqi governorates of Diyala, This saw the National Iranian Gas Co.
Kirkuk and Salah ad Din were targeted by attacks (NIGC) call on Iranians to monitor and limit
understood to have been carried out by Daesh household gas usage, keeping temperatures at
militants. 18-21°C. Work remains ongoing to complete the
The MoE said that “great and high coordina- final phase of South Pars’ 24-part development
tion” had been held between the oil and energy plan while efforts were recently kicked off to
ministries of the neighbours to compensate for explore previously untapped areas of the super-
the reduced volumes. giant asset as part of plans to invest around $11bn
Gas supplies to Iraq were also cut in Decem- to add another 240mcm per day of production.
ber 2020 with Baghdad owing its neighbour With Iraq home an estimated 130 trillion
more than $6bn for gas already provided, but cubic feet (3.7trillion cubic metres) of free and
on that occasion an agreement was reached days associated gas, there is justified outrage that the
later by Iranian energy minister Reza Ardaka- country continues to flare large volumes of the
nian and Iraqi counterpart Majid Mahdi for resource on a daily basis. Momentum is finally
flows to resume at normal rates. starting to build behind efforts to develop Iraq’s
Ardakanian told state news agency IRNA: gas reserves, through both associated gas capture
“good agreements were reached with the Iraqi and independent exploration and development
officials to withdraw Iranian funds from Iraq through a potential gas licensing round.
to pay for the purchase of the coronavirus vac- For the time being though, Baghdad will
cine from Europe using Iran’s existing financial remain reliant on Iranian supplies with its down-
resources in Iraq.” This followed the announce- stream and power plans contingent on its success
ment by Tehran that it had been given the in the upstream.™

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