Iran, Iraq Continue Energy Cooperation
Iran and Iraq started upgrading political, economic and social ties in the aftermath of the downfall of Saddam Hussein's dictatorial regime in 2003. Today, the volume of trade exchanges between the two neighboring nations stands at billions of dollars.
New Iraqi President Barham Salih travelled to Tehran in his fourth regional visit in November in a bid to turn the page in ties between Tehran and Baghdad.
The unilateral tough sanctions imposed by the United States against Iran failed to dissuade the Iraqi president from travelling to Iran.
Upon arrival in Tehran, Salih said he was visiting Iran to "reiterate Iraq's determination for continued cooperation with Iran amid US sanctions" and help the two nations benefit from "shared interest".
Before Salih's visit, diplomatic talks held between Iraq and the US led Washington to grant exemption from Iran sanctions to Iraq in gas trading and foodstuff.
The Iraqi Central Bank announced last August that economic bonds between Iran and Iraq were so close that the Iraqi government had no option but to request sanctions waiver from the US.
Without being impacted by US sanctions, Iran and Iraq have expressed their determination to bring their trade to $20 billion through cooperation in different sectors, particularly oil and gas.
After leaving Iran and during a visit to Italy to attend a conference, the Iraqi president said: "Iraq lays emphasis on better ties with regional nations including Iran, and Baghdad attaches significance to ties with Tehran."
"We share 1,400 kilometers of border with Iran and the two countries share cultural values and roots. It is very important for us to have good ties with Iran," said Salih.
Iraq is the second largest market for Iran's non-oil exports. Iran exports billions of dollars in goods to its western neighbor.
Oil and gas cooperation was a main topic of discussion between Iran and Iraq during Salih's visit. Iran is supplying gas to Baghdad and providing electricity to Basra.
Iran's President Hassan Rouhani held talks with his Iraqi counterpart on oil exploration and production.
After their meeting, Rouhani said: "Today we held talks with the Iraqi president about electricity exchange, gas, petroleum products and the two countries' activities in oil exploration and recovery."
In the meeting, the two sides stressed the need to continue with developing political, economic and cultural ties, saying there are many grounds for the two nations to improve their relations.
Rouhani said the environment was another significant issue for Iran and Iraq. "Some of our people living along western and southern borders are faced with the problem of haze. The two countries should cooperate to resolve this issue," he added.
The Iraqi president visited Iran at a time the US is ramping up pressure on Iraq to cut its economic ties with Iran. Washington has asked Baghdad to honor US sanctions on Iran.
Gas Exports Continue
Under an agreement signed between Iran and Iraq, Baghdad is receiving between 7 mcm/d and 25 mcm/d of gas. Iran has so far exported more than 1.2 bcm of gas to Iraq via Naftshahr terminal.
Two border terminals in Naftshahr and Shalamcheh are planned to deliver natural gas to Iraq. For that purpose, two lines branching out of the Iran Gas Trunkline 6 (IGAT6) – 231-kilometer Kuhdasht-Naftshahr and 141-kilometer Ahvaz-Shalamcheh pipelines – have been built. Gas exports to Baghdad started via Naftshahr last June.
Gas is pumped to Baghdad via the network operating in Ilam and Kermanshah to feed power plants. Any increase in the volume of gas exports to Iraq depends on domestic consumption.
Under the Iran-Iraq agreement, with the completion of IGAT6, gas exports to Iraq will start from 7 mcm/d, which could be brought to 25 mcm/d. Increasing gas exports to Iraq, particularly in the cold months of the year, depends on domestic production-consumption balance. National Iranian Gas Company (NIGC) fulfill its obligations with regard to gas exports, but the more gas is saved in Iran the more the government can generate revenue from gas exports.
The CEO of NIGC recently said the Shalamcheh terminal would deliver gas to Basra and gas has been injected into the Ahvaz-Shalamcheh pipeline. As soon as the Iraqi side expressed its readiness, Iran's gas exports to Basra will start. Like the Baghdad case, gas delivery to Basra will start at the rate of 25 mcm/d. All necessary infrastructures are ready in Iran for pumping gas to Basra, but on the Iraqi side, the infrastructure has not become ready yet.
Under the Iran-Iraq deal, Iran will be exporting between 7 mcm/d and 35 mcm/d to Iraq. The amount of gas export will depend on Iran's domestic consumption, as well as the needs of power plants in Baghdad and Basra.
Gas export is a priority enshrined in Iran's Vision Plan, as well as national five-year economic development plan. Over the past four years, NIGC has been following up on gas exports in light of enhanced output from the South Pars gas field, the offshore giant field shared by Iran and Qatar.
A major clause in Iran's resilient economy is gas export. On this basis, the issue of exports has been emphasized in the Vision Plan, as well as five-year national development plans. In addition to gas exports to Iraq, delivery of gas to newly built towns and parks along the Iran-Iraq gas pipeline is also high on the agenda.
Iran is also exporting 1,200 to 1,300 MW/hour of electricity to Iraq which is suffering from load shedding.
Iran-Iraq Energy Projects
Notwithstanding US sanctions on Iran, Iran and Iraq are proceeding with their energy projects. The two countries currently have five energy megaprojects under negotiations or under implementation.
Hamid Hosseini, spokesman for the Iranian Oil, Gas and Petrochemical Products Exporters' Union (OPEX), said Kirkuk oil swap has started between Iran and Iraq.
Talks are also under way with the Iraqi gas company for Iran to export gas to feed industries in Iraq.
Talks have also started for cooperation in the liquefied petroleum gas (LPG) sector.
The Iraqis are interested in using Iran's LPG experience for cars and big residential compounds.
"Since Iran secured the release of Iraq's Beiji refinery from the Daesh grips, reconstruction of this refinery will be awarded to Iranian companies," Hosseini said.
"In other words, Iranian companies can be contractor in the reconstruction of the refinery," he said.