Iraq says it won’t give up the Iranian energy imports easily, saying it will insist on purchasing gas from Iran and that won’t substitute Iran with another country in this regard.
“Iraq hasn’t been looking for a replacement. Even if we were, we would focus on the replacemets such as continuing importing energy from Iran and getting rid of pressure of the US sanctions on Iraq and Iran,” Iran Stundets’ News Agency (ISNA) quoted Iraqi Ambassador to Iran Saad Abdul Wahab Jawad Qandil as saying on Monday.
The Iraqi envoy went on to explain that Baghdad is seeking alternative ways of purchasing Iranian energy. “For example, using the national currencies or euro instead of dollars as well as barter trade,” added Jawad Qandil.
Central Bank of Iran (CBI) announced in February that Tehran and Baghdad have opened a non-dollar financial channel with the initial purpose of clearing Iraqi debts for importing Iranian energy.
Governor of Central Bank of Iran Abdolnaser Hemmati signs agreement with his Iraqi counterpart, Ali al-Alaq about financial agreement., 6 Feb 2019 (Photo: Central Bank of Iran)
Later in March, the CBI said it has received part of the Iraqi debts.
Iraq was one of the eight countries that was exempted from the US unilateral sanctions for buying energy from Iran. However, Washington didn’t renew the waivers past 2 May.
“Although there are certainly replacements, Iraq is now committed to the agreements and Memoranda of Understanding (MoUs) about importing gas and electricity from Iran,” head of the Iraqi mission in Iran was cited as saying.
"In 2017, Iraq signed a deal with Iran to import up to one billion cubic feet of natural gas daily, which would cost $2.8 billion annually at crude oil prices of $70 per barrel. The actual imports have been half that amount. The fuel accounts for 10 to 15 percent of Iraq’s electricity generation. Even with that, Iraq has a shortfall of three gigawatts of power," according to the New York Times.
Iran has been exporting 1,200 megawatts of electricity to its Arab neighbour. Tehran and Baghdad renewed the deal early February during a meeting between Iranian Energy Minister Reza Ardakanian and Iraqi Electricity Minister Luay al-Khatteeb. The power is exported through three transmission lines in Basra, Diyala and Amara that connect Iraqi grid to the Iranian power lines.
Iraqi Electricity Minister, Luay al-Khateeb (left) shakes hands with Iranian Energy Minister Reza Ardakanian following renewing Iran-Iraq power agreement in Tehran (Photo: IRNA, Amin Jalali)
Should the US fail to grant new waivers to Iraq, the country, that grapples with energy shortfalls and common power blackouts, should embrace for more outages and consequently anti-government protests like the ones that wreaked havoc in Basrah last year. The new Iraqi government is already on edge.
“The Iraqi government has explained the US that importing energy from Iran is an important and essential issue for Iraq especially given the arrival of summer that requires more energy,” warned the Iraqi ambassador to Iran, regretting that Washington hasn’t given an answer so far.