Due to the reduction of Iran's gas exports to Iraq from 52 million cubic meters per day to 8 mcm/d in recent months, the neighboring country’s electricity generation has decreased by 3,400 megawatts, a member of the board of the Iran-Iraq Chamber of Commerce said.
“Even if we were to deliver the same volume of gas to Iraq as before, the total power production of the Arab nation will be less than 15,000 MW while Iraq needs at least 20,000 MW of electricity,” Hamid Hosseini was also quoted as saying by ILNA.
The National Iranian Gas Company’s decline in gas exports is based on the terms of an agreement signed with the Arab neighbor in 2020.
The recent decrease in export, which started four months ago, is supposed to continue for two more months.
Iranian electricity exports to Iraq have also been suspended due to domestic needs.
In 2020, Iran exported around 2 gigawatts of electricity, but that volume dropped to 150 MW this year.
Speaking about the export of electricity by Turkey and other countries to Iraq and its impact on Iran's electricity exports, Hosseini said, “If Turkey, Kuwait or Jordan want to supply 500 MW to Iraq, this amount will not be able to meet Iraq's needs. Unless Iraq builds 5,000 MW of power plants, it cannot solve its electricity problems.”
“Iraq is expanding its urban and industrial sectors, both of which need electricity. Therefore, getting 500 MW of electricity from other countries is not our concern and will not have much effect on our electricity exports in the future,” he added.
Relying on Iran
Years of war, civil strife, terror attacks and the US invasion in 2003 almost destroyed Iraq’s power infrastructure. Iraqi power plants depend on Iranian natural gas to generate power.
Based on a deal between Iran's Energy Ministry and the Iraqi Ministry of Electricity in 2019, Iran agreed to boost cooperation in power production and export, as well as share power industry know-how and technology.
According to the agreement, Tehran is to help rebuild the war-stricken country's power infrastructure and human resources. Plans include the construction of a power plant, modernization of old plants and reduction of power grid losses in Iraq by Iran’s state and private companies.
According to former Iraqi electricity minister, Luay al-Khatteeb, the ministry had explored other options in neighboring countries for gas and electricity imports but there was no better alternative that can compete in terms of volume, price and speed of delivery compared to what Iran offered.
The United States has repeatedly extended by 90 or 120 days a sanctions exemption to allow Baghdad to import Iranian energy after Washington reimposed sanctions on Tehran’s oil sector forbidding countries from purchasing Iranian energy.
The United States has insisted that Iraq, OPEC’s second-largest producer, move toward self-sufficiency as a condition for its exemption for importing Iranian energy, yet Baghdad has struggled to do so, in part due to low oil prices.
The recent decrease in Iranian gas export was based on an agreement and the cut in electricity export was due to domestic needs, and these have nothing to do with Iraq’s unsettled debts to NIGC, which has surpassed $5 billion.
Due to economic and banking restrictions, mainly related to gas and electricity exports to the Arab neighbor, billions in Iranian forex assets are blocked in that country.
