Iran says Iraq gas volumes cut over debts

Iran's state-owned gas company NIGC said it has reduced gas supplies to neighboring Iraq over debts that have risen to more than $6bn.

"The Iraqi electricity ministry owes more than $5bn to NIGC for gas imports from Iran," NIGC said today. "Of this, $3bn is blocked and inaccessible in the [state-owned] Trade Bank of Iraq, and more than $2bn has not even been released yet by the electricity ministry."

Iraq also "owes more than $1bn to NIGC for contractual offenses as per the agreements," NIGC said.

Iran has been exporting gas to Iraq under two supply agreement signed in 2013 and 2015.

Under the first, Iran is committed to export a maximum of 35mn m³/d of pipeline gas to Baghdad, while the second calls on Iran to supply southern Iraq with 20-35mn m³/d. The volumes would be adjusted regularly depending on the regions' needs.

"The goal of export is revenue, which we use for food and medicines," NIGC said. "Therefore, following repeated warnings, which were unfortunately ignored by the Iraqi side, the company has reduced gas export volumes to Iraq, in accordance with the terms of the contract."

Iran has struggled to gain access to billions of dollars of its own money due to US sanctions that were re-imposed following Washington's decision to walk away from the 2015 Iran nuclear deal in 2018.

The NIGC statement comes in response to comments by the Iraqi electricity ministry yesterday that said the reduced Iranian supplies could put the Iraqi capital Baghdad and several other cities at risk of serious power shortages.

"The Iranian side will reduce the supply of gas from 5mn m³/d to 3mn m³/d as a result of non-payment of the debts," a ministry spokesman said, according to Iraq's state-owned news agency Ina. "The reduction will make the supply of electricity almost non existent in Baghdad and [cities of] the Middle Euphrates."

Iran had already cut gas export volumes from 50mn m³/d to 5mn m³/d just two weeks earlier, according to the ministry, and called on Iraq's ministry of finance to speed up the payment of the dues to avoid the potential for power cuts.

Iran's energy minister Reza Ardakanian is due in Baghdad tomorrow to discuss the arrears.

By Nader Itayim