Tehran says talks are underway with Iraq to lift restrictions on gas payments

Shafaq News/ Iranian Oil Minister Javad Owji has announced that Iran is seeking to negotiate with Iraq to remove restrictions on payments owed for gas exports supplied to Iraqi power plants.

Minister Owji's remarks came during a cabinet meeting on Wednesday to discuss settling Iraq's debts for Iranian gas imports.

Owji said the payments, deposited entirely in the Iraqi Trade Bank (TBI) are only accessible if the funds are allocated to purchase essential goods and medicines, indicating that talks with the Iraqi side are underway to address this issue and ultimately lift these restrictions.

In June 2022, Iran received $1.6 billion in outstanding payments for gas exports to Iraq.

Despite being a major oil-producing country in the Middle East, Iraq suffers from a chronic gas shortage and relies mainly on imports from Iran. Meanwhile, the gas produced during oil extraction, which could be utilized, is being burned.

Iraq is among nine countries responsible for the majority of gas flaring. World Bank data shows that Iraq is the world's second-largest gas flarer after Russia and ahead of Iran and the United States. In 2020, Iraq flared 17.374 million cubic meters of gas.

Iraq heavily relies on Iranian gas imports to power its electricity grid, producing around 14,000 megawatts from the local grid and importing gas and energy for an additional 4,000 megawatts.

Iran's electricity exports to Iraq have accounted for over 80% of the country's total exports in recent years, according to the Iranian Ministry of Energy.

Currently, Iraq produces 16,000 megawatts of electricity, which falls short of its estimated capacity of 24,000 megawatts. Its population is expected to double by 2050, leading to an increase in energy consumption, according to the United Nations.