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Oil Market Volatility Surges

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Iran Suspends Gas Exports To Iraq After Earthquake

Iraq flaring

Iran halted late on Tuesday gas exports to neighboring Iraq for several days, in order to repair pipeline damages caused by an earthquake near the Iraqi border on Sunday night, Reuters reported on Wednesday, citing a statement from Iraq’s electricity ministry.

Major Iraqi power plants are dependent on Iranian natural gas supply.

On Sunday night, a 6.3-magnitude earthquake in Iran’s western Kermanshah province near the border with Iraq wounded more than 700 people.

Now Iran is trying to repair the damages to the gas pipeline to Iraq, and the halt of exports for a few days would cut supply to Iraq’s power grid by 2,500 MW, according to the Iraqi electricity ministry. Iraq’s oil ministry will supply the stations dependent on Iranian gas with fuel to keep them working during the Iranian supply halt, but there could be power cuts in provinces of the power plants affected, Reuters quoted Iraq’s electricity ministry as saying.

Iraq is looking to obtain a U.S. approval to continue importing Iranian natural gas for its power supply in exchange for food, Reuters reported earlier this month, citing Iraqi government officials.  

The U.S. sanctions on Iran have been putting Iraq in a tight spot—on the one hand, Baghdad’s trade is closely linked with its neighbor Iran, but on the other hand, the United States is an ally that helps with security.

Yet, the 45-day exemption that the U.S. had given Iraq to stop importing Iranian gas wouldn’t be enough for Baghdad to find alternative gas supply, a senior Iraqi government official and a member of Iraq’s ministerial energy committee told Reuters two weeks ago.

Iraq received a U.S. exemption to continue importing Iranian natural gas and electricity. According to Iraqi government officials who spoke to Bloomberg in early November, Iraq had set up a bank account to pay for the Iranian gas and electricity in Iraqi dinars.  

By Tsvetana Paraskova for Oilprice.com

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