On 10 July 2023, Iraqi Prime Minister
Mohammed Shia Al-Sudani convened an emergency meeting[1] with energy officials to explore
alternatives to Iranian gas, including supplies from Qatar and Turkmenistan. The
meeting was held in response to the abrupt suspension of Iran's gas exports to
Iraq, which resulted in the reduction or shutdown of power plant operations in
Al-Mansuriyah, Baghdad, Sadr, and some other regions of the country. Iraq’s
electricity ministry declared that Iran’s restrictions on gas exports to its
neighbor had caused the country to lose approximately five thousand megawatts
(MW) of power.[2] In order to attain stability in
electricity supply, Iraq urgently needs 40,000-MW of power,[3] of which 26,000 MW of electricity is generated
from imported gas, primarily from Iran.
Because of this, Al-Sudani directed the Iraqi
government[4] to come up with quick fixes and alternatives
as well as to continue its initial efforts to import gas from Turkmenistan and
Qatar. In this regard, Iraqi Parliamentary Committee on Electricity and
Energy[5] met the Minister of Electricity,
Ziyad Ali, and his accompanying delegation on 15 July to look for alternative
options for obtaining and purchasing gas, including gas supplies from
Turkmenistan and Qatar. Regarding this, Iraqi Oil Minister Azzat Sabir announced on 24 August that “an
initial agreement has been reached with Turkmenistan regarding the import of
gas for the operation of their power plants. The agreement between the two
countries was reached after negotiations in Ashgabat. Details will be reflected
in the relevant agreement. The agreement, which will be signed closer to the
end of the year, will determine the volumes of gas that Turkmenistan will
supply to Iraq.”[6]
During
this process, on 6 October, Turkmenistan's Minister of State and Chairman of
the State Concern “Turkmengaz” Maksat Babayev visited Baghdad. On the same day,
Turkmenistan and Iraq signed a Memorandum of Understanding (MoU) on the supply
of natural gas to meet the needs of production stations and the electrical
system. “The preliminary agreement is to import approximately 25
million cubic meters (883 million cubic feet) of gas per day” from Turkmenistan.[7] In the
continuation of this process, on November 8, 2023, a meeting between
representatives of the State Concern “Türkmengaz” and the delegation of the
Republic of Iraq led by the Minister of Electricity Ziad Ali Fadel took place
in Ashgabat. According to the protocol that was signed in this meeting, 9
billion cubic meters of Turkmen natural gas will be transported annually
through Iran to Iraq under the SWAP scheme during 5 years.[8]
However, this agreement, if implemented,
will not completely solve the problem of Iraq and it can only help reduce the
current problems of gas and electricity shortages in this country. The truth is that Iraq suffers from persistent power
shortages despite its large oil and gas reserves. This is particularly
noticeable in the summer, when temperatures rise above 50 degrees Celsius (122°F)
and power consumption peaks. Although the current production volume of gas in
southern Iraq is about 900 million cubic feet and 300 million cubic feet in
northern Iraq, these amounts are insufficient to meet the demand, Iraq’s
minister of electricity, Ziad Ali Fadel stressed.[9]
Indeed, on the one hand, the limitation of water resources — particularly
in light of Turkey’s control of water flows from the upstream areas of the
Tigris and Euphrates rivers in recent years — has posed challenges in the
development of dams and hydroelectric power plants for electricity generation
in Iraq. On the other hand, Iraq's thermal power plants, which use gas fuel,
are heavily dependent on imported gas input from Iran.
Despite the close political relations between Iran and Iraq, unilateral
U.S. sanctions against Iran and payment problems for imported gas by Iraq have
caused several disruptions in Iran's gas exports to the country in recent
years, and the halt of gas in early July 2023 was the latest example of this.
Iraqi Prime Minister Al-Sudani, in the emergency meeting, noted that “the U.S.
sanctions and non-compliance with the gas dues payment mechanism agreed upon in
2018 caused a 50 percent reduction in gas supplies
from Iran which negatively
affected electricity production in Iraq”.
Although in June, Iraqi officials received U.S. permission to pay about $2.76 billion to Iran after receiving clearance from U.S.
Secretary of State Antony Blinken, and the Iraqi Minister of Electricity also
announced that all of Iran's gas payments have been deposited into the
Trade Bank of Iraq (TBI), it
appears that the problem of receiving payments for Iran's gas exports to Iraq,
especially blocking Iranian
gas money in the TBI, has not been fully resolved yet.
To overcome these challenges, the Iraqi government is pursuing two options
simultaneously in the domestic and international arenas. In the domestic area,
Iraq is planning to build combined cycle power
plants totaling 4,000 MW in
the next two years,[10] which use
both a gas and a steam turbine together to produce electricity. This will be only a small portion of the 26,000 MW of
electricity generated from imported Iranian gas. However, in the international
arena, as was previously mentioned, Baghdad is looking for new sources of gas
imports to reduce the negative impact of Iran's sanctions and banking issues on
the sustainable supply of Iraq's electricity network. In this regard,
Turkmenistan and Qatar are the two main options for the Iraqi government.
However, with respect to Turkmenistan’s role — the primary focus of this
article — it has the fourth-largest proven gas reserves in the world, after
Qatar, Iran, and Russia, with around 50 trillion cubic meters (tcm). Indeed,
Turkmenistan's permanent neutrality policy in foreign policy also enables the
country to cooperate with various parties, including China, Russia, Iran,
Azerbaijan, Turkey, and Europe, in the field of energy. However, given the geographical
distance between the two countries, the question is how to supply a portion of
Iraq's imported gas.
The first and most likely option is the transit or swap of
Turkmenistan's gas to Iraq via Iran. In transit, although it can be done
utilizing the existing Iran-Turkmenistan-Turkey gas pipeline to transfer gas to
northern Iraq and through the Turkmenistan-Iran pipeline to transfer gas to the
eastern and central parts of Iraq, this is very difficult in practice. In this
regard, Gholam Hossein Hasantash, a faculty member of the Institute for
International Energy Studies (IIES) Tehran, in an
interview with the author, said it is currently not possible to transport gas
from Turkmenistan to Iraq through Iran unless a separate pipeline is built with
the financial support of both Iraq and Turkmenistan, as well as Iran’s approval.
However, due to the high level of investment required for such a pipeline,
which would be more than 1000 kilometers long and pass through mountainous
areas, it seems very difficult to conclude such a tripartite agreement.
Another option will be the swap of Turkmenistan's gas to Iraq via Iran. Recent agreements
between Turkmenistan and Iraq show that both sides have chosen this option.
Before this, Iran has taken steps in the field of gas swap with Turkmenistan. In this regard, a trilateral gas cooperation between
Turkmenistan, Iran, and Iraq may be formed as a result of the resolution of
long-standing gas disputes between Iran and Turkmenistan and the trilateral gas swap
agreement signed on November 27, 2021, by Turkmenistan, Iran, and the Republic of
Azerbaijan.[11] Indeed, Iran repaid $1.6 billion in gas debts to
Turkmenistan using its deposits withheld in Iraqi banks.[12] This
can facilitate the transfer of Turkmenistan's gas to Iraq via Iran, which can
help Iraq reduce its dependence on Iranian gas imports and ensure a more
sustainable supply of gas for its electricity network.
It is important to remember that most of Iran's oil and gas fields,
including the “South Pars Gas Field,” are located in the country’s south and
southwest. Although Iran has a wide network of gas transmission lines, during
the winter season, the country’s northeastern and northern provinces, including
Razavi Khorasan, North Khorasan, Mazandaran, and Golestan, with their high gas
consumption, cause a sharp drop in gas pressure in pipelines and distribution
stations. To
overcome this challenge, Iran has pursued a trilateral gas swap agreement with
Turkmenistan and the Republic of Azerbaijan, as well as a bilateral gas import
agreement with Turkmenistan to import 10 million cubic meters of gas per day.
Therefore, the formation of a trilateral gas swap agreement between
Turkmenistan, Iran, and Iraq is possible and can lead to more stable and
sustainable supply of gas for Iran's domestic needs, especially during the
winter months. Gholam Hossein Hasantash in the interview
with the author said that “logistically, swapping is
completely possible. If the potential of such a swap exists, transit has no
economic logic at all.” The important point is that 83 percent of Iran's power
plants use gas sources and less than 20 percent of them use other sources,
including water. Consequently, during the winter months, when gas consumption
peaks and pressure drops, not only households face problems, but also power
plants face a serious challenge. In fact, the problem that Iraq is facing in the
summer, Iran will deal with in the winter. As a result, trilateral gas cooperation between Iran,
Iraq, and Turkmenistan can help address the issue of supplying sufficient gas to
Iran’s power plants during the winter and high gas consumption during that time,
while also providing assistance to Iraq's power plants during the summer. Additionally,
from a financial and banking perspective, the Iraqi government will be a party
to Turkmenistan, and the level of sanctions and banking restrictions imposed by
the U.S. on Iraq will also be reduced.
The second option for exporting Turkmenistan's gas to Iraq is Liquefied
Natural Gas (LNG), which can be transferred by tankers. The volume of gas
transportation via tankers is much lower compared to pipelines, and LNG is
usually twice as expensive as piped gas. Hasantash said that “at present, Turkmenistan is not among the
countries that produce and export LNG and lacks liquefaction facilities.
Moreover, because it does not have access to open waters, it cannot potentially
be a major exporter of LNG. It does not have any LNG receiving terminals”.
However, the main advantages of LNG will be Turkmenistan’s direct gas
exports to power plants in different parts of Iraq and meeting some of the
country’s gas needs, particularly during pressure drops in the Turkmenistan and
Iranian gas transmission lines. Although Turkmenistan’s production and export
capacity for LNG cannot be compared to a country like Qatar, Turkmenistan has
taken steps in recent years to develop its LNG industry, and in May 2023, the country
started exporting LNG to Pakistan through Afghanistan’s Kandahar for the first time,
which included 50 gas tankers, each carrying 30 tons of gas.[13]
Overall, it seems that in both forms of gas exports or swaps from Turkmenistan to Iraq through pipelines or LNG exports, Iran will play the most important intermediary role between Ashgabat and Baghdad. While it appears that the Iraqi government is considering a mixed approach to importing gas from Turkmenistan through both pipelines and LNG exports, the reality is that the main form of gas imports from Turkmenistan to Iraq will be through pipelines, whereas LNG will be the main mode of gas imports from Qatar.
[1] “Iraq turns to Qatar,
Turkmenistan to reduce reliance on Iranian gas,” The Cradle, July 11,
2023, https://new.thecradle.co/articles/iraq-turns-to-qatar-turkmenistan-to-reduce-reliance-on-iranian-gas.
[2] “Iraq loses 5000 MW of
power as Iran decreases gas supply,” Rudaw.net, July 5, 2023, https://www.rudaw.net/english/middleeast/iraq/05072023.
[3] “Iraq Dependent on Iran’s
Gas Import for Generating Electricity: Minister,” Tasnim News Agency, July
25, 2023,
[4] “Iraq continues efforts
to import gas from Turkmenistan, Qatar,” Iraqi News, July 11, 2023, https://www.iraqinews.com/iraq/iraq-continues-efforts-to-import-gas-from-turkmenistan-qatar/
[5] “Iraq plans gas imports from Qatar, Turkmenistan,” Shafagh
News, July 16, 2023, https://shafaq.com/en/Iraq-News/Iraq-plans-gas-imports-from-Qatar-Turkmenistan.
[6] “Turkmenistan to supply gas to Iraq,” Azer News, August
28, 2023, https://www.azernews.az/region/214089.html.
[7] “Iraq signs 'preliminary' gas deal with Turkmenistan,” Al
Monitor, October 6, 2023, https://www.al-monitor.com/originals/2023/10/iraq-signs-preliminary-gas-deal-turkmenistan#ixzz8Gr8Kpq9J.
[8] . “Turkmenistan will export natural gas to Iraq”, Ministry of
Foreign Affairs of Turkmenistan, November 9, 2023
[9] “Iraq Dependent on Iran’s Gas Import for Generating Electricity:
Minister”, Tasnim News Agency, July 25, 2023,
[10] “Iraq unveils plan for 4,000 MW combined cycle power plants,” Zawya,
January 10, 2023, https://www.zawya.com/en/projects/utilities/iraq-unveils-plan-for-4-000-mw-combined-cycle-power-plants-npnkyhe0.
[11] Vali Kaleji, “New Gas Cooperation Between Iran and
Turkmenistan: Prospects and Limitations”, Eurasia Daily Monitor,
Jamestown Foundation, December 17, 2021, https://jamestown.org/program/new-gas-cooperation-between-iran-and-turkmenistan-prospects-and-limitations/.
[12] “Iran signs gas swap deal with Turkmenistan,
Azerbaijan,” Argus Media, November 29, 2021, https://www.argusmedia.com/en/news/2278061-iran-signs-gas-swap-deal-with-turkmenistan-azerbaijan.
[13] Aygerim
Sarymbetova, “Turkmenistan Begins Exporting Gas to Pakistan via Afghanistan,” Caspian
News, May 2, 2023, https://caspiannews.com/news-detail/turkmenistan-begins-exporting-gas-to-pakistan-via-afghanistan-2023-5-2-0/.
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