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Iran has finally started exporting natural gas to its neighbor Iraq, after a four-year delay due to the challenging security situation in war-torn Iraq. The exports have started at a daily rate of 7 million cu m, according to a deputy oil minister who spoke to IRNA, as quoted by Reuters, but should reach 35 million cu m at an unspecified point in the future.
The gas will be supplied under two contracts, one for exports to Baghdad power plants, and the other to Basra. Iran already supplies electricity to its energy-hungry neighbor.
Last year, there were reports that the gas exports would begin in September 2016, with the initial amount the same, at 7 million cu m, later to rise to as much as 70 million cu m. Yet, in addition to security concerns, there was trouble with the funding and operational issues with the construction of the pipeline that would supply the fuel, the Financial Tribune notes.
Currently, Iran exports some gas to Turkey, but the bulk of its production stays at home, to be used both for things like power generation and heating, and for oil well injection to boost the crude oil yield of local fields. This increased use of natural gas, and plans to start exporting it on a larger scale highlight the significance of Total’s recent announcement to commit US$1 billion to the development of phase 11 of the giant offshore South Pars field.
The contract for the development of the field should be signed within the next two weeks, according to Ali Kardor, the managing director of the National Iranian Oil Company. South Pars, which Iran shares with Qatar, is the world’s biggest natural gas deposit, with the Iranian portion accounting for about 7.5 percent of global gas reserves.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.