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Iraq strikes deal with Iran to secure summer gas imports

Iraq depends on imports from neighbouring Iran for a third of its gas needs. ©AFP

Baghdad (AFP) - Iraq has agreed to pay $1.6 billion in debt to Iran by June 1 to secure a steady gas supply for power generation through the summer, its electricity minister said.

Chronic underinvestment through decades of war and sanctions has left Iraq dependent on imports from its eastern neighbour for a third of its gas needs.

But US sanctions on Iranian oil and gas have complicated Iraq's payments for the imports, leaving it in heavy arrears and prompting Iran to respond by periodically switching off the taps.

The result has been extended power cuts across much of the country, particularly during the summer, when temperatures routinely reach 52 degrees Celsius (126 degrees Fahrenheit) sending demand for refrigeration and air conditioning soaring. 

"We have reached agreement on supply in sufficient quantities.We have agreed on 50 million cubic metres (per day) during the four summer months," acting electricity minister Adel Karim told state television late Wednesday.

During winter, Iraq will import between 10 million and 20 million cubic metres per day of Iranian gas, he added.

"They agreed to supply us with the gas but they had conditions.They are demanding...$1.6 billion," Karim said, adding the payment will have to be made "by the start of June".

The figure represents Iraq's arrears for 2020, which have yet to be settled because of the arcane payment method Iraq is obliged to use to comply with an exemption from US sanctions on Iran.

Iraq is not allowed to simply hand over cash to Iran.Payments must be used to fund imports of food and medicines.

Karim said gas imports from Iran are currently flowing at 38 million cubic metres per day.

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.

Karim said imports of liquefied natural gas were also expected to begin from Qatar in the "next few months" but underlined that no alternative source was likely to replace Iranian gas soon.

"In my humble opinion we will depend on Iranian gas for five or 10 years to come," he said.

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Dive Deeper:
Russia using energy 'as weapon', says Berlin
Berlin (AFP) - German Economy Minister Robert Habeck accused Russia on Thursday of using energy as "a weapon", after Moscow…
What’s the Fallout from Ukraine’s Pipe Shutdown?
The shutdown of a gas pipeline in eastern Ukraine has sent a fresh wave of energy jitters through Europe. The…
Nuclear talks: Iran’s Raisi launches major economic reform
President announced reforms a day before the EU’s coordinator for nuclear deal negotiations arrived in Tehran.
EXPLAINER: What's the fallout from Ukraine's pipe shutdown?
The shutdown of a gas pipeline through Russian-held territory in Ukraine is sending a new wave of energy jitters through…
One subscription that gives you access to news from hundreds of sites
Russian pipeline sanctions raise fears of gas interruption
European gas prices have risen after Russian state-owned exporter Gazprom said it would no longer send supplies to Europe via…
The gas 'poker game' between Russia and Europe
Paris (AFP) - The drop in Russian gas flows to the European Union has had no major effect on supplies,…
Get all your news in one place