By Anas al-Bar | 2023-08-29

Every summer, under the pretext of Iraq's tardiness in paying for natural gas purchases from Iran, Tehran cuts off or reduces the flow of gas to its western neighbor.

As a result, Iraq, which mainly depends on Iranian gas to operate its power stations and cover one-third of its energy needs, faces increasing power outages during the hottest months of the year.

In July, production at six major power plants -- al-Mansouriya, Sadr Gas, South Baghdad, al-Rashid, al-Taji and Khor al-Zubayr -- was halted as a result of the power cutoffs. Other main and secondary power plants were also partially offline.

In an attempt to mitigate the crisis, Iraq's Electricity and Oil ministries supplied a number of power plants with alternative fuel -- gasoline -- to return them to operational mode.

Ahmed Moussa al-Abadi, spokesperson for Iraq's Ministry of Electricity, said the gasoline supplies have helped cover part of the shortfall in production, as they have facilitated the production of 24,000 megawatts of electricity.

However, the amount of generated electricity is still below the record level of production Iraq reached before the recent crisis -- 26,000 megawatts, the highest rate in its history, al-Abadi told Al-Fassel.

Gas flow restricted despite payment

Iraq needs more than 30,000 megawatts to meet its massive demand for power at this time of the year, when the power grid is put under tremendous strain.

Today, Iran is pumping 15 million cubic meters of gas per day, which is used to operate electricity-generating plants in Baghdad and Iraq's southern provinces.

This amount is less than half of what Iran used to pump before it decided to stop the flow of gas, which Iraqi officials say was taken "suddenly and without prior warning or bilateral coordination."

Baghdad's debt to Tehran, which was paid in late June, amounted to $1.6 billion in gas and energy purchases made from 2019 to 2021.

Iran's decision to restrict gas supplies was made on the heels of a June 25 announcement by Majid Chegeni, Iran's deputy oil minister, who said that Iraq had paid its gas debt in full but that Iran was facing problems transferring the funds from Iraq's TBI Bank.

Because of sanctions-related banking restrictions, Iran has reportedly not been able to access the funds.

Iraq spends about $6 billion on gas imports from Iran each year. It imported some 9.4 billion cubic meters of gas from Tehran in 2022.

In July, the United States issued an exemption, renewable up to 120 days, for Iraq's gas purchases from Iran, allowing Baghdad to pay Tehran for gas despite the sanctions.

The exemption was issued on the condition that Iran use the funds to purchase humanitarian goods.

Trying to foment Iraqi discontent

However, politics rather than payment problems is the real explanation for Iran's gas cutoffs, said one observer.

The Iranian government is restricting gas exports to Iraq "to try to stir up popular discontent and embarrass the Iraqi government by igniting protests again over power outages," political analyst Tariq al-Shammari said.

The Iraqi government aims to stop gas imports that are exhausting its budget and is implementing an ambitious plan to secure its energy needs from alternative sources, he added.

The plan is to install combined-cycle power units in gas-operated power plants, which are "thermal turbines" that produce 4,000 megawatts without fuel, he told Al-Fassel.

On August 10, Iraqi Prime Minister Mohammed Shia al-Sudani inaugurated two combined-cycle power units at the Amarah gas-operated power plant, with a total capacity of 250 megawatts.

Iraqi officials have also noted that certain projects are under way to build thermal power plants, plants powered by solar energy, and regional power grid lines.

Developing gas fields

As part of its plan to develop gas fields, Baghdad reached an agreement with the Saudi Aramco company in May for the development of Akkas gas field in Anbar province.

Once developed, the field would have the capacity to produce 400 million cubic feet (11.3 million cubic meters) of gas per day.

Other efforts to develop Iraq's gas fields are also under way with the help of major companies in al-Nasiriyah, Gharraf and Basra oil fields, reports say.

"This plan [to develop gas fields] infuriates the Iranians and harms their interests, so they are trying to disrupt it and keep Iraq shackled in debt to drain its wealth and economy," al-Shammari said.

Iraq could "achieve autonomy in the energy sector, especially electricity, over the next few years, and enhance the level of services it provides to its citizens," he said.