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With budgets already stretched thin, Iraq’s budget is being taxed even more by its policy of flaring natural gas while paying high prices to import natural gas from Iran.
The process of flaring natural gas—a byproduct of oil production—is controversial on climate grounds. Flaring is the process of burning this natural gas, and is employed when it doesn’t make economic or practical sense for oil companies to capture the natural gas and sell it.
But the spokesman for the Ministry of Electricity, Ahmed Moussa, said that paying high prices for gas from Iran in large quantities for the purpose of generating electric power “constitutes a major defect,” according to Shafaq.
Moussa proposes instead that the Parliamentary Oil and Energy Committee move to take advantage of local gas instead of paying high prices for Iran’s.
Over the last few days, Iran has cut the amount of gas it has sent to Iraq by half, to 5 million cubic feet, which “harmed the production of the electrical system, as it lost between 5 and 6 thousand megawatts, and thus negatively affected the hours of electricity supply.”
Relying more on local gas would require an extension of an existing pipeline, but would cut the price of gas used in electricity generation by a factor of 8.
Iraq—one of the most oil-dependent economies in the world—cannot afford unnecessary expenses as the government is already under enormous pressure to pay its government workers and squelch the protests amid the lack of employee compensation and widespread poverty.
Iraq currently wastes $2.5 billion flaring the gas associated with oil production, according to the Washington Institute for Near East Policy, which is the equivalent of 1.55 billion cubic feet per day—or ten times the amount it purchases from Iran.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.