Iran will begin next Tuesday the operation of a pipeline supplying natural gas to Iraq, Iran’s oil minister said Saturday, after the initial agreement were signed in 2013 but implementation was delayed many times.
Iraqi oil minister Bijan Zangeneh was quoted by Iranian agency Tasnim as saying that the pumping of natural gas through the pipeline begins are slated to begin on Tuesday.
Earlier in January, Iran’s Deputy Petroleum Minister for International Affairs and Trading Amir-Hossein Zamaniniya was quoted by the domestic media as saying that a pipeline that has been established between Iran and Iraq was already filled with natural gas.
“Iran is ready to start the export of gas to Iraq and Iraq is also ready to receive the gas,” Zamaniniya told Shana news agency of Iran’s Ministry of Petroleum.
He noted that banking issues had to be fully resolved before Iranian gas could be deployed to Iraq stressing that “a letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount,” adding that Iran would turn on the taps once the payment was made by Baghdad.
Iran and Iraq had previously payment issues, as Iran has cut electricity supply to Iraq due to late unpaid expenses.
This, the official further emphasized, could take place during an upcoming visit to Tehran by an Iraqi delegation.
Iran had announced last summer that it was ready to export gas to Iraq. However, the project had been suspended over security risks as a result of insecurity in Iraq.
The two countries signed a basic agreement for the export of natural gas from Iran’s South Pars gas field to Iraq back in 2013.
Based on the agreement, gas exports will begin at seven million cubic meters per day and is scheduled to reach the highest level envisaged in the contract after 21 months. As such, in hot seasons 35 and in cold ones 25 million cubic meters of natural gas will be deployed to Baghdad region yielding an aggregate total of 10 billion cubic meters per year.
The project is estimated to earn Iran $3.7 billion a year in revenues.
National Iranian Gas Company (NIGC) Managing Director Hamidreza Araghi will attend the unveiling ceremony on Tuesday and the second part of the sixth national pipeline with a length of 600 kilometers is still under construction.
The sixth national gas pipeline network has the capacity to carry 110 million cubic meters per day through which natural gas would be exported to Iraq and Syria, according to Iranian media.
Iran gas and oil development
A year after the lifting of the western sanctions, Iran is eager to regain its previous oil export market share and sign deals with oil and gas majors for the development of its vast crude oil and natural gas resources.
Royal Dutch Shell signed earlier in December a provisional agreement on Wednesday to develop Iranian oil and gas fields to be the biggest company investing in Iran after lifting that the sanctions.
A spokesman for Shell said a memorandum of agreement was signed Wednesday with the National Iranian Oil Co. “to further explore areas of potential cooperation.” The agreement is nonbinding and involves the development of Iran’s oil fields in South Azadegan and Yadavaran and the Kish gas field, according to Reuters. The South Azadegan and Yadavaran fields straddle the border with Iraq.
Analysts said the agreement underscored major oil companies’ willingness to keep doing business with Iran despite the risk that U.S. President-elect Donald Trump could scrap the nuclear deal that ended the sanctions earlier this year.
This deal came after a similar one with the French company Total in November. The last deal was signed on 8 November to further develop its part of the world’s largest gas field.
The remarkable part of the deal was financing it with euros by the French company to avoid any possible US sanctions, reflecting a state of trust between Iran and the European trade partners.