Iran reduced natural gas exports to neighboring Iraq, claiming that it owed it more than $ 6 billion for supplies already made. The cuts were made two weeks ago, and more cuts will be made, Iranian officials said.
“Iraq’s electricity ministry owes more than $ 5 billion to NIGC for gas imports from Iran,” said the National Iranian Gas Company, as quoted by Argus, adding: “Of these, $ 3 billion is blocked and inaccessible in the [state-owned] Commercial Bank of Iraq, and more than $ 2 billion has not yet been released by the electricity ministry. “
The rest of the money held comes from “contractual breaches under the agreements,” said the NIGC.
The NIGC agreements refer to calls for deliveries of a total of 55-70 million cubic meters of natural gas per day, with volumes adjustable according to demand, Argus notes in its report. Average daily deliveries were 50 million cubic meters daily before the cuts, reducing gas flow to just 5 million cubic meters. Deliveries are expected to be reduced to 3 million cubic meters, the Iranian side said.
The NIGC statement came in response to a warning from the Iraqi electricity ministry, which said the reduction in gas supplies put Baghdad and other cities at risk of a power outage, Reuters reported on Monday.
According to the ministry, Iraq owes Iran only $ 2.7 billion, spokesman Ahmed Moussa told Bloomberg in an interview. Moussa added that, due to the cuts already implemented, electricity production in Iraq has dropped by around 7 GW, leading to shortages of supply.
“The purpose of export is the recipe, which we use for food and medicines,” said the Iranian gas company. “Therefore, after repeated warnings, which unfortunately were ignored by the Iraqi side, the company has reduced gas export volumes to Iraq, according to the terms of the contract.”
By Charles Kennedy for Oilprice.com
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