Tehran and Baghdad have agreed to extend the contracts on Iran’s gas exports to Iraq, the Iranian oil minister said.
“The two deals on exporting Iran’s gas to Baghdad and Basra power plants will be extended for five years,” Javad Owji was also quoted as saying by the Oil Ministry’s news service Shana.
The minister made the remarks in his talks with reporters after he met with Iraqi Minister of Electricity Ziad Ali Fadel at the weekend.
Pointing to a memorandum of understanding signed by the two neighboring countries to cooperate in oil, gas and petrochemical sectors, Owji said Iran enjoys a high status in terms of human resources and technical and engineering capacities, and has agreed to exchange data with Iraq and cooperate in the exploration and the integrated development of shared oilfields with the western neighbor.
According to the MoU, Iran will also help Iraq lay oil and gas pipelines and renovate its oil refineries.
The MoU was signed between Owji and his Iraqi counterpart Hayan Abdel-Ghani in the presence of Iraq’s Prime Minister Mohammed Shia al-Sudani.
Owji and al-Sudani put emphasis on the expansion of bilateral cooperation in the energy sector, urging Iran-Iraq Working Group to follow up the implementation of the recent MoU through holding regular sessions.
The Iraqi prime minister brought forward proposals to develop joint fields, train human resources and implement petrochemical projects, which were welcomed by Owji.
Earlier in April, President Ebrahim Raisi met his Iraqi counterpart Abdul Latif Rashid in Tehran and underlined the development of Tehran-Baghdad relations and promotion of cooperation in infrastructure fields, including water, electricity, gas and energy.
Dependent on Iran
Despite its large oil and gas reserves, Iraq relies on Iran for natural gas that generates as much as 45% of its 14,000 megawatts of daily electricity consumption.
Iran also supplies Iraq with another 1,000 MW directly, making itself an indispensable energy source for its Arab neighbor.
Iraq’s energy sector is closely tied to Iran. Baghdad depends on electricity and natural gas imports from its neighbor to power its national grid.
Iraqi officials have said it would be impossible to sever ties with Iran to comply with US sanctions. Iraq has been repeatedly granted waivers by the US to continue its Iranian imports.
In the past two years, Iran received about $2.73 billion from Iraq regarding its gas debts and this way, the Arab nation settled all payments related to purchases from the National Iranian Gas Company.
The NIGC produces over 1 billion cubic meters of gas per day, of which more than 90% are used domestically and the rest is exported. Iran supplies gas through two pipelines to Iraqi power plants.
Close to 2,000 MW of power plants have been built in Iraq by Iranian companies with Iraqi investment. Knowledge-based companies from Iran's private sector are building 1,700 MW of power plants in the neighboring country.
Iraq has been the biggest importer of Iranian electricity for more than a decade. It needs more than 23,000 MW of electricity for domestic demand but decades of war, civil strife and terror attacks have destroyed its power infrastructure.
Iraq has a 7,000-MW power deficit and large parts of the country have for years struggled with systematic blackouts of several hours a day.
Iran has exported more than 65 billion kilowatt hours of electricity worth more than $6.2 billion to Iraq since 2005.
