Iran, Iraq exempt from fine in gas deal for 1 year

Business Materials 27 June 2015 17:08 (UTC +04:00)

Tehran, Iran, June 27

By Mehdi Sepahvand - Trend:

Iran and Iraq are exempt from fine for one year in a gas trade agreement.

Announcing the news, CEO of the National Iranian Gas Company Alireza Kameli further said that the two sides' commitments start when both have completed the facilities needed for the transfer of gas.

He said the gas transfer which was to start in June is delayed because Iraqi territory is occupied by the Islamic State (IS) group and lacks enough security, SHANA news agency reported June 27.

He further said once Iraq manages to wipe the IS off areas involved in the gas transfer, Iran will start feeding the pipeline.

According to Kameli, Iraq suffers severe power shortage and although it has bought a number of ready-made power plants from the US, it cannot operate them due to lack of fuel.

The gas export is to start with four mcm/d and is able to increase to 35 mcm/d.

Iraq needs Iranian gas to use in its power plants. The country's gas reserves are about 3.6 trillion cubic meters, about 10 times less than Iran. About three-fourths of Iraq's natural gas reserves are associated with oil. Currently Iraq produces only 0.6 bcm/d of refined gas.

Iraqi gross natural gas production was about 20 bcm in 2012, of which 12 bcm (58 percent) was vented and flared. Natural gas that is not flared is mostly used for re-injection into oil wells to increase oil recovery rates.

Iran has five major cross-country pipeline projects, of which four -worth $13.7 billion- are aimed towards gas export to Pakistan, Iraq, Turkey and Oman.