Tuesday, July 12, 2022

Iraq Pays Its Debt To Iran For Natural Gas and Electricity

(Dreamstime)

As the summer months approached it appeared that Iraq would be facing another crisis with its energy sector as Iran reduced its natural gas exports due to unpaid bills. That was finally resolved and energy production went back up, but still not enough to meet demand.

 

Iran had been warning Iraq about its debt for months to seemingly no avail. In October 2021 Tehran halted its gas exports due to the $1.69 billion it was owed. Several power plants were shut down as a result. In January 2022 it was reported that gas started flowing again but at reduced levels. Iraq lost 4,000 megawatts of power as a result. By June gas exports were down again by 35% as Iran was demanding Iraq pay its bills. This was coming at the worst time as electricity demand dramatically goes up during the summer months. The government always feels pressure to meet this need because there have been protests for over a decade over the lack of power.

 

Iraq felt the pressure and finally paid off its debt. The Electricity Ministry got a loan from the Trade Bank of Iraq and paid off its debt to Iran in the middle of June. Iraq is now receiving 240 million cubic meters per day of natural gas. At the same time this is still not enough. Iraq needs 250 million cubic meters per day and is only producing 22,000 megawatts when demand stands at 35,000. As a result Baghdad signed another deal with Iran to import more power and Electricity Minister Karim said that Iraq will need Iranian exports for another 10 years or more.

 

The United States has been giving Iraq waivers on Iran sanctions to allow these imports since the Trump administration. In return Baghdad said it will find alternatives and eventually reduce its purchases from Iran. That has completely failed. Instead Iraq appears to be increasing its dependency upon Tehran because it is nowhere close to resolving its electricity shortages.

 

SOURCES

 

Bas News, “Iran Halts Pumping Gas to Iraqi Power Plants: Report,” 10/14/21

 

Bechocha, Julian, “Iraq’s electricity to improve compared to previous year: Electricity minister,” Rudaw, 7/11/22

 

Al Mada, “Iraq pays full dues for Iranian gas and awaits increased supplies,” 6/19/22

- “Iran cuts 35% of gas supplies,” 6/5/22

- “Iranian threat to cut off gas from power stations due to non-payment of dues,” 5/25/22

 

Mahmoud, Sinan, “Iraq hit by severe power shortages as Iran cuts gas supplies,” The National, 1/4/22

 

NRT, “Iraq Pays Off Debt Owed To Iran Over Natural Gas,” 7/11/22

- “Iraqi Minister Predicts Country Far From Self-Sufficient In Electric Supply,” 6/29/22


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