Natural gas exports from Iran to neighboring Iraq declined by 40% between April and August this year, extending a downward trend from 2024, Zawya reported today, citing information from the Trade Promotion Organisation of Iran.
No reasons for the decline in exports were mentioned, but the value of the exports in the period stood at $950 million, which was much lower than the value of gas exports to Iraq in April-August 2024. An earlier report by local media said all Iranian exports to Iraq had declined in the five-month period, by 18% on the year, to a total of $3.75 billion.
Iran has been a major gas supplier to its neighbor despite often uneven relations between the two countries. Iraq has abundant natural gas supplies but is not developing them at any meaningful scale, paying for imports instead. The country lacks the gas processing plants necessary to process the associated gas extracted from its massive oilfields and continues to flare some of those gas volumes. Iraq was also importing electricity from Iran, with the annual bill for both natural gas and electricity at some $7-$8 billion.
Recently, Iraq tried to diversify its import dependence by launching gas imports from Turkmenistan. However, the deal involves a pipeline passing through Iran, which is under U.S. sanctions, and the U.S. has refused to grant Iraq a waiver so it can start importing Turkmen gas. Earlier this year, the Trump administration also canceled a waiver for imports of Iranian electricity, worsening the supply situation in Iraq.
“Proceeding (with the Turkmen deal) could trigger sanctions on Iraqi banks and financial institutions, so the contract is currently suspended,” Adel Karim, adviser to Iraq’s prime minister for electricity affairs, told Reuters earlier this month. The failure of this plan means that Iraq now has to seek alternatives.
By Charles Kennedy for Oilprice.com
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