Page 10 - MEOG Week 42

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Iraq receives another four- month sanctions waiver
iran
THE uS State Department on October 17 extended by 120 days a waiver on sanctions to allow Iraq to import gas and electricity from Iran.
“The waiver ensures that Iraq is able to meet its short-term energy needs while it takes steps to reduce its dependence on Iranian energy imports,” the State Department said in an emailed statement cited by Reuters. “We engage regularly with the Iraqi government to support measures that improve Iraq’s energy independence.”
The Trump administration granted the first waiver last year after it re-imposed sanctions on Tehran, certain of which forbade countries from buying Iranian energy.
Its dealings with baghdad are complicated in that while the Iraqis need to maintain strategic links with the uS, the Iraqi government has close ties with Tehran.
Concerned that the energy waivers provided to Iraq compromise the maximum pressure campaign it is directing at Iran - described by Tehran as an “economic war” and “economic terrorism” - in an attempt at forcing fundamen- tal change in Iran’s nuclear and ballistic missile development programmes and roles in Middle East affairs such as proxy wars, the uS has been pushing baghdad to find alternative energy resources. Iraq has responded to that pressure by saying it will struggle to generate enough elec- tricity unless it continues to use Iranian gas for three to four years.
Turkey is another neighbour of Iran that has protested that it does not have enough diversity in energy sources to drop its purchases of Iranian gas entirely.
Iraqi Electricity Minister Luay al Khateeb told reporters in Abu Dhabi last month that Iraq now had capacity for 18,000 MW of power, up from 12,000-15,000 MW last year. However, peak demand in Iraq can reach about 25,000 MW and is rising every year.
The minister added that the power sector needed investment of at least $30bn to upgrade its grid. The latter is around 50 years old and has lost 25% of its capacity because of Islamic State attacks, he said.
Concerted effort
In July the Iraqi Ministry of Oil (MoO) signed a deal with Honeywell and bechtel that would see the uS services firms increase the utilisa- tion of associated gas from five oilfields in basra Governorate.
In its statement, the MoO said that the addi- tional 600mn cubic feet (17mn cubic metres) per day would come in two stages, with each adding 300 mmcf (8.5 mcm) per day.
Honeywell and bechtel will work together on the project, which is aimed at reducing gas flar- ing from the oilfields by up to 20%, and signed a joint memorandum of understanding (Mou) with the MoO on July 17.
The Al-Ratawi gas hub will focus on the Majnoon, West Qurna, Luhais, Tuba and Subha oilfields, with the first phase lasting 36 months, according to Oil Ministry spokesman Aassim Jihad. It falls within the wider South Gas utilisa- tion Project (SGuP), on which a final investment decision (FID) was taken in January.
Local press reported that the state-owned South Gas Co. (SGC) would work with the uS firms.
The Mou was also signed by Iraqi Oil Minis- ter Thamir al-Ghadhban and the new uS ambas- sador to Iraq, Mathew Tueller.
Ghadhban told the gathered press that the government and the MoO were “very keen on investing in gas in order to increase the annual budget of the country and increase the produc- tion of Iraqi natural resources, and to also reduce air pollution by not burning the gas anymore,” He added that the deal would also “benefit the electricity sector”.
baghdad currently lacks sufficient domestic gas supplies to meet the country’s power gen- eration requirements. Coupled with deficient electricity infrastructure, these have caused shortages and public anger, erupting in mid- 2018 into violent protests.
After lengthy negotiations, compounded by security problems near the border, Iraq began importing gas from neighbouring Iran in 2017, receiving around half of the 10.3bn cubic metres per year contracted in 2017 and covering 10-15% of the power generation sector’s requirements.
This has increased, with Iranian gas for power generation or direct electricity imports account- ing for around a third of demand.
The signature of the uS ambassador on the Mou is indicative of Washington’s determina- tion to bring about Iraqi electricity independ- ence and thus reduce trade with its controversial neighbour.
When the uS re-imposed sanctions on Iran in November 2018, baghdad was issued with a 45-day waiver to continue importing electricity. This was renewed in December 2018, March, June and now October 2019 for 90 days each.™
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w w w . N E W S B A S E . c o m Week 42 22•October•2019