Iran receives $1.6B in gas debt from Iraq after negotiations

TEHRAN, Iran (AA) – Iran has received $1.6 billion in arrears from the Iraqi government for imports of natural gas, Oil Minister Javad Owji has announced.

In a Twitter post, Owji said the debt from previous years was received “a few hours ago” following “several months of negotiations” between the two sides, crediting it to “active energy diplomacy.”

He further said that the volume of Iran’s gas exports has surged by 25% since the beginning of the year compared to last year and the collection of revenues has also increased by 90%.

According to officials, more than $5 billion in funds remains frozen in Iraq from exports of gas and electricity as a result of US sanctions.

Earlier, Iraq’s Ministry of Electricity announced the “start of the process” of paying gas debt to Iran, adding that Iraq needs 50 million cubic feet of gas per day.

A spokesman for the ministry, Ahmed Moussa, reportedly said that Baghdad had started to pay dues for the year 2020 via internal borrowing from the Trade Bank of Iraq.

He said the two sides were holding talks to increase the quantity of energy imports to Iraq, adding the country needs between 50-55 million cubic feet of gas per day.

Despite its large oil and gas reserves, Iraq remains heavily dependent on Iran for its energy needs, with the neighboring country providing a third of Iraq’s gas and electricity supplies.

The non-payment of dues has forced Tehran to slash its gas and electricity supplies to Iraq several times in the past few years, leading to frequent outages in the Arab country.

Discussions were underway at multiple levels since last year to reach an understanding on freeing the funds with a sanctions waiver from Washington.

US sanctions have for years prevented Iran from accessing its assets in several countries, including Iraq.