The Spokesman of Iraq's Electricity Ministry has said that Iraq is searching for alternatives to generate the electricity it needs, including developing its own natural gas production, because Iran is now exporting only a fraction of the natural gas agreed upon for the current year.
Speaking to Al Sabah newspaper, Ahmed al-Abadi said Iran is currently exporting only around three million cubic meters of natural gas to Iraq out of the agreed 25 million cubic meters quota for the current year.
According to an agreement signed between the two countries in 2011 Iran must deliver 50 million cubic meters of natural gas to Iraq per day. But Iran's production is apparently not enough to satisfy domestic demand and full export commitments.
Iraq heavily relies on Iranian natural gas imports to fuel its power plants as its own resources have not been developed. In a country where the government has for years struggled with meeting electricity and gas demand, an energy shortage can have serious political ramifications: blackouts and gas shortage can potentially fuel mass protests.
Due to payment issues resulting from U.S. sanctions since a year ago Iraq has not been able to pay in dollars, and foreign-currency-deprived Iran has not agreed to be paid in Iraqi dinars, which given the circumstances is the only possible way.
The last 90-day waiver that the United States has given to Iraq to continue purchasing gas and electricity from Iraq will expire in February when Iraq's Commerce Bank has to stop any transactions with Iran.
According to Iran's Oil Minister Bizhan Zanganeh Iraq now owes $2 billion to Iran for gas and electricity imports which it cannot pay.