Page 10 - MEOG Week 17

MEOG PoLICy MEOG
US extends Iraq’s sanctions waiver
Iraq
thE US has given Iraq another 30-day sanc- tions waiver, enabling imports of Iranian energy to continue without triggering dire economic penalties, according to two government officials familiar with the matter. A source in the US State Department was quoted as saying that “ this brief extension of the waiver would allow [Iraq] time for the formation of a credible government”.
With just two days remaining to the expira- tion of a thirty-day US waiver to import Iranian gas and electricity, the Iraqi Minister of Electric- ity has said it will take three to four years for the country to stop importing energy from Iran.
This is based on the premise that “the Iraqi government will enjoy full uninterrupted execu- tive authority and no interference from political entities and in an environment that is welcoming to investments and multinational participation”.
Washington has repeatedly granted waivers to Baghdad to allow the latter to keep importing Iranian gas and electricity despite US sanctions on tehran. The last waiver was limited to a thir- ty-day exemption, which is about to expire.
Iraq was expected to invest $10bn in its oil and gas projects to end its dependency on Iran within four years. Nevertheless, none of the pro- jects have made any headway.
Speaking of the waiver, the US State Depart- ment concluded: “Once the [Iraqi] government is in place, the US will reassess whether to renew the waiver and for how long, and looks forward to resuming our co-operation with the govern- ment of Iraq to reduce Iraq’s dependence on unreliable Iranian energy imports”.
Meanwhile, Iran’s official statistics show a sig- nificant increase in the country’s electricity and gas exports, and Iraqi officials have made contra- dictory statements about energy imports from their neighbour.
For example, on April 20, a spokesman for the Iraqi Ministry of Electricity, Ahmed Al-Abadi, announced that Iraq had reduced its electric- ity and gas imports from Iran by 75% after approaching self-sufficiency in its own energy production.
Iraq has been a customer of more than 80% of Iran’s electricity exports. Iranian Ministry of Energy numbers show the country’s electricity exports increased by more than 28% in 2019, reaching more than 8tW per hour. however, Iran’s official statistics are always questioned by experts and are largely inconsistent with inter- national data.
Statistics from the National Iranian Gas Co. also show that the country’s gas exports rose by 26% last Iranian calendar year (March 21, 2019 to March 20, 2020) and reached 17.5bn cubic metres.
Iraq and turkey are the only customers of
Iranian gas, and since turkish data do not indi- cate an increase in gas imports from Iran, the growth suggests an equivalent rise in exports to Iraq.
however, both tehran and Baghdad have confirmed that last winter Iran’s gas exports to Iraq dropped seven times, reaching about 3-4mn cubic metres per day. In the hot season of last year, there was no evidence of an increase in Iran’s gas exports to Iraq, and it is not clear how Iran’s gas exports grew by 26%.
Iran has a daily export contract of 50 mcm (more than 18 bcm per year) of gas with Iraq, but only about half of that gas is delivered for con- sumption at power plants.
“The country can import up to 1,200 MW of electricity per year and up to about 1.2bn stand- ard cubic feet per day during peak usage in the hot summer months, when temperatures in the southern part of the country can soar to 50 Cel- sius. Electricity supply was estimated at 19 GW in 2019 and [is] forecast to reach 20 GW in 2020, while power demand in peak time is around 25 GW,” Luay al-khateeb told S&P Global Platts.
to provide additional electricity, Iraq imports both electricity directly from Iran and gas that it uses in its power plants, but still faces a shortage during the hot seasons.
According to World Bank data, owing to the lack of gas collection equipment in Iraq’s oilfields, 18 bcm of “associated petroleum gas” produced are burned and wasted annually.
Although assisted by Western companies, it has been years since Iraq embarked on large- scale projects to collect associated gases in its oilfields. Recently, the Iraqi Oil Minister, Thamer Ghadhban, announced that two contracts had been signed last year for the daily collection of 21 mcm of gas from the halfaya and Ratawi oilfields.
Backed by other projects, Ghadhban said, 28 mcm per day (10 bcm per year) will be added to the country’s gas production. Yet he did not say when the projects would be operational.
Earlier in 2018, Iraq had also promised sim- ilar projects that would end its dependency on Iranian gas. however, none of the promised pro- jects has made much progress so far.In the mean- time, the country’s projects appear to be slowing down, and tumbling oil prices have exerted heavy pressure on Baghdad in recent months.
Based on the International Monetary Fund (IMF) estimates, the Iraqi government needs oil prices to be fixed at above $60 a barrel to avoid a budget deficit, whereas Brent oil prices are around $20 per barrel today.
The IMF forecast shows that the Iraqi gov- ernment will be struggling with a budget deficit equal to 23.3% ($40bn) of its GDP in 2020.™
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w w w . N E W S B A S E . c o m Week 17 29•April•2020