Iraq signs natural gas deal with Iran

• 13 years ago (2011-05-24)
• Junior Isles

Middle East 326 North America 1021 Nuclear 659

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Iraq has signed a new five-year deal to import natural gas from Iran to ease its electricity woes, an official has said. The agreement deepens Iraqi economic ties with Tehran as US troops prepare to leave at the end of this year.

Iraq's government has been endeavouring to rebuild its war-damaged power infrastructure since electricity shortages last summer caused violent riots across the country. Currently, blackouts are still common despite billions spent on improving power stations and transmission lines.

Iraq's Electricity Ministry spokesman, Mussab al-Mudaris, said the five-year plan with Iran will let Iraq buy 25 million cubic meters of natural gas each day to feed two power plants in the north-eastern suburbs of Baghdad — one built by Iran and the other by South Korea's Hyundai conglomerate.

Al-Mudaris also confirmed the gas will be fed through a pipeline expected to be completed by the end of 2012. The deal still needs to receive the backing of Iraq's Cabinet and parliament, but al-Mudaris expected approval within a month.

For Iran, the pact marks another important market for its goods and services as it toils under the weight of international economic sanctions from the controversy over its nuclear programme. Iran, which possesses the world's second-largest gas reserves, has also looked to boost exports to central and south Asia.

Iraq's currently produces about 7000 MW of electricity daily  – roughly half of actual demand. Half of Iraq’s approximately 2000 MW of imported electricity comes over the border from Iran. Al-Mudaris said this figure could rise to about 75 per cent by June.