Iraq strikes deal with Iran to secure summer gas imports
Summer temperatures in Iraq routinely reach 126°F, sending demand for refrigeration and A/C soaring
Iraq 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 Wednesday.
Chronic underinvestment through decades of war and sanctions left Iraq dependent on imports from its eastern neighbor for a third of its gas needs.
But US sanctions on Iranian oil and gas 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 extended in power cuts across much of the country, particularly during the summer, when temperatures routinely reach 126 degrees Fahrenheit, sending demand for refrigeration and air conditioning soaring.
"We have reached an agreement on supply in sufficient quantities. We have agreed on 50 million cubic meters (per day) during the four summer months," Iraq’s Electricity Minister Adel Karim told state television.
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During the winter, Iraq will import between 10 million and 20 million cubic meters per day of Iranian gas, he added.
The $1.6 billion 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.
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.