Iraq secures Iran gas imports in preparation for summer

Market: Condensate, Crude oil, Electricity, Natural gas
13/05/22

Iraq is to receive 50mn m³/d of gas from Iran during the four summer months, a supply it will remain reliant on for 5-10 years depending on finding alternatives, Iraq's minister of electricity Adel Karim announced on 11 May.

"It was agreed with Iran to supply Iraq with 50mn m³/d. Iraq needs Iranian gas for 5-10 years and those years could be reduced depending on finding alternatives," Karim told state news television, in a disclosure of details of the deal with Tehran.

Iraq announced on 29 April that it had reached an agreement with Iran for resumption of Iranian gas supplies, with Baghdad repaying debts owed to Tehran in instalments.

"Iran provides us now with 35 to 38mn m³/d of gas," Karim said, adding that "Iraq owes Iran $1.69bn for gas dues," which Baghdad will begin repaying in June.

Extended power cuts across Opec's second-largest oil producer have often resulted in unrest, particularly during summer months when temperatures rise above 50°C. The caretaker government of prime minister Mustafa al-Kadhimi has been making moves to prepare for the situation.

Iran has periodically switched off its gas supplies because of the accumulation of debt, heaping further pressure on Baghdad. US sanctions on Iranian oil and gas have complicated Iraq's payments of its arrears. But the US periodically gives Iraq sanctions waivers allowing it to pay for its imports from Iran.

Alternatives under consideration include a connection to the Turkish national grid to supply electricity to Iraq's second city Mosul and a link to Kuwait and Saudi Arabia to help power the south.

"The linkage with Turkey will be ready within a week as I believe it will reach 300MW per day," Karim said, adding that "there are negotiations with the Gulf Interconnection Authority next week so the link with Saudi Arabia will be in two phases of 500 and 1500 MW per day."

Iraq has also reached a tentative agreement with Qatar which will provide gas in the winter. "The Qatari gas will reach us via ships and could begin within months," Karim said.

The Iraqi minister expressed hope in reaching 25GW a day of electricity production with the arrival of gas flows from Iran. Iraq currently produces 21GW a day the minister declared, but the country needs 27.5GW a day to meet peak summer demand, according to the EIA.

By Bachar Halabi

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