Iran slashes gas exports to Iraq due to outstanding payments

December 28, 2020 - 11:54

TEHRAN - Iran has reduced its natural gas exports to Iraq and threatened further reductions due to the Arab country’s failure to pay its dues, Bloomberg reported on Sunday, quoting a spokesman for Iraq’s electricity ministry as saying.

Iran has slashed the amount of gas sent to its neighbor to five million cubic meters (mcm) from 50 mcm two weeks ago, Ahmed Moussa said in an interview.

The Islamic Republic has threatened to further cut the gas supply to three million cubic meters a day, and this has increased the likelihood of more electricity shortages in Baghdad and other major cities, according to the official.

Iran started cutting exports to its neighbor, which is OPEC’s second-biggest oil producer after Iraq fell behind on its gas payments. Iraq owes around $2.7 billion in unpaid bills, Moussa said.

According to the spokesman, Iranian Energy Minister Reza Ardakanian is going to meet Iraqi officials in Baghdad on Tuesday to discuss the issue.

Power production has dropped by around seven gigawatts as a result of the gas supply curbs, Moussa said. Baghdad and other central locations have been hit hardest by electricity shortages.

While Iraq’s supply of Iranian gas has been disrupted, its electricity imports are underway as before, he added.

Iran has inked two separate contracts to export the product to the Iraqi cities of Basra and Baghdad.

Given Iraq's need for natural gas for consumption in power plants, negotiations on importing Iranian gas were started in late 2010 while a contract for gas sales to Baghdad was sealed in June 2013.

The two countries also inked the agreement for the deployment of natural gas to Basra in October 2015, but the exports were halted due to payment issues.

Later on, the Iraqi government approved a deal in late 2017 to import gas from Iran to the eastern border province of Diyala, increasing purchases of the Iranian fuel, which were resumed in June 2017 after several years of hiatus.

EF/MA

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