Page 10 - MEOG Week 25

MEOG P o L i C y MEOG

Iraq to pay Iran debt with food and medicine

iraQ AFTER an eight-hour trip to Iraq on June 17, to $59 million. The value of Iran’s annual exports
the Governor of the Central Bank of Iran (CBI), of electricity and gas to Iraq is estimated at $2
Abdolnasser hemmati, announced that Bagh- billion.
dad had agreed to settle its gas and electrici- Since the beginning of the Iranian calendar
ty-related debts to Tehran by providing food and year 1398 (March 21, 2019), Tehran has stopped
medicine to Iran. publishing details of its foreign trade, while the
The Islamic Republic state-run Mehr News details of the current Iran-Iraq trade are also not
Agency (MNA) also cited the newly elected Iraqi clear. however, at the end of 2019 the Chair-
Prime Minister, Mustafa al-Kadhimi, as saying at man of the Trade Promotion Organization of
his meeting with hemmati, “Iraq will cooperate Iran, hamid Zadboum said the value of Iranian
with Iran to solve the problems for payments of exports to Iraq amounted to a quarter of the Arab
natural gas. I have given the necessary orders to country’s total imports.
the relevant officials. “Twenty-five per cent of the import market in
Since the Islamic Republic is under U.S. bank- Iraq is held by Iran, as the value of Iranian goods
ing sanctions, Iraq cannot transfer foreign cur- makes up $10 billion of the total of $40 billion
rency to Tehran for gas and electricity imported in Iraqi imports [per annum],” he was quoted as
from Iran. saying by ILNA.
Iranian officials have repeatedly referred to In a report last autumn, the World Bank
Iraq’s $2 billion overdue debt to Iran. Iraqi offi- announced that it was deeply concerned about
cials, for their part, maintain that the money was “Iraq’s dependence on food imports.” Therefore,
transferred to Iran’s account at the Tejarat Bank it is unclear how Baghdad will be able to pay back
of Iraq. however, because of sanctions, Iran can its debt to Tehran by sending food and medicine
only import goods from Iraq. to Iran.
Iran’s non-oil exports to Iraq alone (exclud- It is also unclear whether Tehran wants to
ing electricity and gas) in 2018 amounted to $9 buy food and medicine that Iraq has imported
billion, and its total imports from Iraq amounted from other countries.™

Per F orman C e

Iran refinery gas output grows

iran ThE National Iranian Gas Co. (NIGC) has revenue. however, in the recent past, the lack of
announced growth in the natural gas production ethane supply required Iran to assign a monthly
at Iran’s refineries. quota of the material to the petrochemical
A spokesman was quoted as saying that the companies.
average natural gas production was 674 mcm/d. But the quotas are gradually being eliminated
The official further said that the country’s gas as more South Pars Gas Field phases in the Per-
consumption was currently at 540 mcm/d, hav- sian Gulf are becoming fully operational. With
ing hit a high of 600 mcm last year. The rate of the development and operation of most phases
usage is likely to rise during the summer peak as of South Pars and the countdown for finalisation
electricity consumption rises and gas consump- of the remaining phases of the giant gas reservoir
tion by the country’s power plants follows. on the one hand and the implementation of three
The steady increase in Iran’s gas production crucial gas projects in Assaluyeh and Kangan,
has provided the domestic petrochemical players Iran’s petchem sector will be provided with an
with the opportunity to diversify their feedstocks abundance of different gas feedstocks.
in a bid to tackle the shortages created during the The domestic demand for ethane is now 5.5
past years. The insufficient production of vital million tons and the envisaged surplus will in
gas feedstocks has been one of the biggest chal- due course be able to be exported.
lenges facing the development of the country’s Increasing the production capacity of meth-
petrochemical industry throughout the past two ane, ethane, propane, butane and gas condensate,
decades. The challenge has mostly been felt by will diversify the feedstock baskets of the petro-
the gas-burning ethane producers struggling chemical players and thus help them propel their
with feedstock shortage. plans despite the sanctions imposed by the US
Ethane is among the highest value-added against Iran’s strategic sector.
products used as feedstock in petrochemical The last offshore platform of South Pars Gas
plants. Each ton of ethane, as the principal ele- Field phases 22-24 has become operational,
ment in manufacturing petrochemicals, namely increasing the giant reservoir’s production by 14
ethylene can generate at least $1,000 in export million cubic meters per day.™

P10 www. NEWSBASE .com Week 25 24•June•2020