US halts Iraq gas deal via Iran; Baghdad moves towards LNG imports

Iraqi officials told Reuters that Iraq had sought a U.S. license to import Turkmen gas via Iran, but the license was never granted, Energy Press reported. Reuters also reviewed draft swap agreements that would see Iran receive no payment but keep up to 23 percent of the gas flowing from Turkmenistan to Iraq. After months of negotiations with the Trump administration, Iraq failed to secure a waiver from the United States, which has waged a “maximum pressure” campaign against Iran.

“Continuing this deal (with Turkmenistan) could lead to sanctions on Iraqi banks and financial institutions, so the deal has been suspended for now,” Adel Karim, an adviser to the Iraqi prime minister on electricity, told Reuters. The failure of the plan has prompted Iraq to look for alternatives. Despite its rich oil and gas reserves, Iraq still relies on gas imports from neighboring countries, including Iran, to fuel its power plants. Iraq lacks the gas processing plants needed to process the associated gas extracted from its vast oil fields, and so flares some of it. Earlier this year, Iraq’s electricity supply situation worsened after the Trump administration revoked Iraq’s waiver on electricity imports from Iran.