Iraq to receive gas from Turkmenistan

Turkmenistan agreed on Thursday to export gas to Iraq, a move that could boost the Iraqi energy sector and lessen the country’s dependence on Iran.

The Iraqi Oil Ministry’s undersecretary for gas affairs, Ezzat Saber, said Iraq reached a preliminary agreement on importing gas following a meeting with officials in the Central Asian country, the official Iraqi News Agency reported.

The exact amount has not been specified, and the two countries aim to sign a memorandum before the end of the year, according to the agency.

Why it matters: Iraq is one of the biggest oil producers in the world, and the second biggest in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia. Iraq’s natural gas sector, on the other hand, is relatively underdeveloped. Iraq’s natural gas reserves were the 12th largest in the world at the end of 2020. However, Iraq lacks the infrastructure to move the gas from oil production areas, which is where most of the gas reserves are located. As a result, Iraq flares its natural gas, according to the US International Trade Association. Gas flaring is the process by which gas associated with oil extraction is burned off.

Gas is especially important for Iraq due to the country’s chronic power issues. Iraq's electricity shortages are especially troublesome during the scorching hot summer months. Public electricity is only available for part of the day, and people rely on fuel-powered generators to fill the gap.

Without a strong gas sector, Iraq has become dependent on Iran for both gas and electricity. About 40% of Iraq’s power supply comes from Iranian gas and electricity imports, according to Reuters.

However, US sanctions on Iran prohibit energy deals with the Islamic Republic. Last month, the United States granted Iraq another waiver to pay Iran for electricity, Reuters reported at the time.

Turkmenistan, for its part, has the fourth-largest gas reserves in the world, but its gas export plans are running into difficulties. Turkmenistan is also eyeing gas exports to Europe in response to the Ukraine war as Europe seeks to reduce its dependence on Russian gas. However, Turkmenistan is facing financing challenges regarding exports to the continent, Bloomberg reported last month.

Iraqi is seeking to develop its gas sector in the meantime. In July, Iraq signed a deal with France’s TotalEnergies to recover gas flares from Iraqi oil fields and use them to supply power plants.

Know more: Iraq is mired in an oil dispute with Turkey over the latter’s oil imports from the Kurdistan Region. Turkey halted the flow via the Ceyhan port in March in response to a court decision that awarded Iraq damages for Turkey’s unauthorized imports from Kurdistan. Turkish Foreign Minister Hakan Fidan visited Iraq this week, but the two countries have thus far failed on an agreement to restart the oil flows.