Iraq may import Qatari gas in 15 months if talks, infrastructure finalized

Iraq may be able to import Qatari gas in 15 months, depending on the pace of negotiations and finalization of infrastructure needed to receive the commodity, which will partly replace Iranian energy supply, the country's acting electricity minister said Feb. 9.

"After getting cabinet approval for our proposals, we will head fast to start the actual work, to prepare the [gas] platform and buy gas from Qatar," Adel Karim told the state-run Iraqi TV.

"Importing the gas includes building the infrastructure and this will take at least a year to 15 months, depending on the agreement. This needs to happen because Iraq cannot continue to rely on one source for gas."

Karim visited Qatar on Feb. 6 and met with Saad al-Kaabi, the minister of state for energy affairs, to discuss gas imports.

Iraq imports Iranian gas and electricity to plug power shortages, but supply from its neighbor has been intermittent due to technical and financial problems.

Iran cut or reduced gas and electricity supply to Iraq last year and in recent months, prompting Iraq to look for alternatives such as Qatari gas.

US waivers

Iraq is under increasing US pressure to wean itself off Iranian energy, which has been subject to sanctions re-imposed in 2018 by Washington during the Donald Trump administration. Baghdad receives US waivers to continue importing Iranian energy without economic repercussions.

Iraq also owes Iran $1.6 billion in 2020 unpaid energy bills due to US financial sanctions that hinder Baghdad from making direct payments to Tehran.

"Since the US government allows us to import Iranian gas, they should also allow us to pay them for the gas," Karim said.

Under a five-year contract, Iraq is supposed to receive up to 65 MMcf/d of gas for power generation and up to 1.5 GW, the minister said. However, Iraq didn't receive any gigawatts last summer and current gas supply is 8 MMcf/d. One issue is the lack of penalties in the contract in case of non-supply, Karim added.

"We will need Iranian gas for many years until the oil ministry gathers [enough] gas and supplies it to power stations," Karim said.

IOC help

Iraq, OPEC's second biggest producer, mainly produces gas pumped with oil but OPEC+ quota restrictions have limited its gas supply. Moreover, Iraq burns most of its gas, making it the world's second biggest flaring country after Russia, according to the World Bank.

The oil ministry struck last year a number of agreements with international oil companies to gather and process associated gas to increase domestic supply.

The electricity ministry has also signed agreements to import power from Saudi Arabia, Jordan, Turkey and the grid of the six-member Gulf Cooperation Council via Kuwait. GCC countries include Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the UAE

Saudi Arabia and Iraq signed a memorandum of understanding on Jan. 25 to connect their electricity grids, as OPEC's two largest oil producers work together to help reduce Baghdad's dependence on Iranian energy imports.

Tariff negotiations

The power line between Iraq and Saudi Arabia will take 2-3 years to set up, with the initial phase reaching 500 MW, to rise later to 1 GW.

Currently, negotiations are taking place with Riyadh over tariffs and how to build and connect the two grids, Karim said.

Talks over the interconnection with GCC grid also revolve around tariffs, with initial capacity expected to be 500 MW and rise later to 1 GW. Iraq is building the power line inside its territories, while Kuwait will build its part with Iraqi financing, the minister added.

The connection with Turkey is done, but electricity supply requires EU approval. Initial supply will also be 500 MW and later go up to 1 GW.

With Jordan, the power line is expected to be ready within a year or more.