Iran has reduced gas exports to its neighbor Iraq, claiming that the latter owes it more than $ 6 billion in supplies already made. The cuts were made two weeks ago and other cuts will be made, Iranian officials said.
“The Iraqi Ministry of Electricity owes NIGC more than $ 5 billion in gas imports from Iran,” the National Gas Company of Iran was quoted as saying by Argus, adding: “Of this, $ 3 billion is blocked and inaccessible in [state-owned] The Commercial Bank of Iraq and more than $ 2 billion have not even been released by the Ministry of Electricity yet. “
The rest of the money held comes from “contractual offenses under the agreements,” NIGC said.
The NIGC agreements cover the demand for deliveries of a total of 55-70 million cubic meters of natural gas per day, with volumes adjustable to demand, Argus notes in its report. Average daily deliveries averaged 50 million cubic meters per day before the cuts, reducing gas flow to just 5 million cubic meters. Deliveries are set to be further reduced to 3 million cubic meters, the Iranian side said.
The NIGC statement came in response to a warning from the Iraqi Ministry of Electricity, which said a reduction in gas supplies puts Baghdad and other cities in danger of power outages, 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 reductions already implemented, electricity production in Iraq has decreased by about 7 GW, leading to shortages.
“The purpose of the export is the revenue we use for food and medicine,” the Iranian gas company said. “Therefore, following repeated warnings, which were unfortunately ignored by the Iraqi side, the company reduced the volume of gas exports to Iraq, in accordance with the terms of the contract.”
By Charles Kennedy for Oilprice.com
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