BAGHDAD, May 26 (Reuters) – Iran‘s foreign minister told his Iraqi counterpart on Friday that a reduction in gas exports to Iraq was a technical matter and Tehran had not decided on any cuts, an Iraqi foreign ministry statement said, as the two countries try to resolve Baghdad’s huge unpaid bills.
Iraqi Foreign Minister Fuad Hussein asked Iranian’s Hossein Amirabdollahian during a phone call about Iran‘s reduction of exports in the past week, which Hussein said “led to a decrease in electricity production and has repercussions on daily life,” the statement said.
An Iraqi delegation led by the electricity minister will travel to Iran next week to discuss the issue, Iraqi state media reported on Tuesday, noting gas imports had decreased by 20 million cubic meters at the time.
Iraq usually imports between 50 million to 70 million cubic meters of gas, according to Iraq’s electricity ministry spokesperson Ahmed Moussa.
Iraq imports electricity and gas from Iran that in total makes up between a third and 40% of its power supply, especially crucial in the sweltering summer months when temperatures can top 50 degrees Celsius (122°F) and power consumption peaks.
Iraq, however, has trouble paying for those imports: it owes Iran around $11 billion in outstanding debts, according to Iraqi officials, which it struggles to pay due to U.S. sanctions on Iran that limit dollar transactions.
While Iran has slashed gas supplies previously amid the longstanding dispute over the debt repayments, both countries have sought to find creative ways to settle parts of the debt.
During Friday’s phone call, Amirabdollahian thanked Iraq for trying to resolve the issue of financial transfers with Washington, the statement said.
It noted transfers had been made from Iran‘s account at Iraq’s state-owned Trade Bank of Iraq to a Saudi bank, with the aim of securing spending on Iranian pilgrims who will travel to Saudi Arabia for the 2023 haj season.
Iraq spends roughly $4 billion per year on imports of Iranian gas and power while at the same time burning massive quantities of natural gas as a byproduct of its hydrocarbons sector.
Iraqi Prime Minister Mohammed Shia al-Sudani has said that capturing gas to fuel the country’s power sector is a priority and Iraq in April reached a massive $27 billion deal with French oil major TotalEnergies TTEF.PA that includes plans to capture gas.
(Reporting by Timour Azhari; Editing by Marguerita Choy)