Iraq opts for 'gas swap' with Turkmenistan
The new deal, dubbed 'gas swap' involves importing 20 million cubic metres of natural gas per day from Turkmenistan, which will pipe the supplies to Northern Iran.
Iran will then export the same quantity of its own gas to Iraq and keep the imported Turkmenistan gas for its own domestic use.
Iraq's Electricity Minister Ziad Fadhil is in Turkmenistan to discuss the new supply mechanism, the official Iraqi news agency reported on Monday.
It quoted Ministry spokesman Ahmed Mousa as saying gas-thirsty Iraq has already signed a supply contract with Turkmenistan to fuel its deficit-ridden power facilities.
He said the contract involves the supply of 20 million cubic metres per day of Turkmenistan gas to Iran, which was supposed to re-export the gas to Iraq through its pipeline network.
'This mechanism has faltered because the Trade Bank of Iraq has not been able to open an account to pay Turkmenistan due to the US sanctions since the gas has to pass through Iranian pipelines…we could not get US approval for this,' Mousa said.
'The Minister is now visiting Turkmenistan to discuss a new proposal called Gas Swap…it involves transport of Turkmenistan gas to Northern Iran, which will send the same quantity of its own gas to Iraq,' he added.
Iraq had been heavily reliant on neighboring Iraq for its gas needs before supplies sharply declined from nearly 50 million cubic metres over the past few months after production growth in Iran failed to match a sharp rise in domestic consumption.
Iraq's Electricity Ministry reported last week that Iranian gas supplies plunged to around 20 million cubic metres per day in May from the contracted 45 million for that month, causing a large decline in its power generation.
Baghdad signed a gas supply contract with Turkmenistan in 2024 but it has remained on the shelf apparently because of Western sanctions on Tehran.
Iraqi officials said this year they would also import offshore terminals to receive LNG shipments from some gas producers, including Qatar and Oman.
(Writing by Nadim Kawach; Editing by Anoop Menon)
(anoop.menon@lseg.com)
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