Iraq is under pressure from the US to make itself less dependent on Iran’s energy, but Iraqi leaders say the demand is a bar set too high given the Arab country’s state of infrastructure which is still badly battered decades after the US invasion and sanctions and economic decline, Press TV wrote.

US leaders were hoping to bring Iraq on board as Prime Minister Mustafa al-Kadhimi visited Washington last week. President Donald Trump said US companies were involved in many prospects in Iraq’s oil business.

Ahead of Kadhimi’s visit, five US firms signed agreements with the Iraqi government aimed at boosting what the White House characterized as Iraq’s energy independence from Iran.

The US Department of Energy in a statement said that Honeywell International, Baker Hughes, General Electric, Stellar Energy and Chevron had signed commercial agreements worth as much as $8 billion with the Iraqi ministers of oil and electricity.

US energy companies have been trying to expand their involvement in the oil-rich nation. In 2018, the Trump administration reportedly warned Iraqi officials to forgo a $15 billion power generation deal with Germany’s Siemens and award it to General Electric instead.

According to Bloomberg News, senior US officials warned former Iraqi prime minister Haider al-Abadi at the time that signing the deal with Siemens would seriously jeopardize Iraq’s relations with the United States.

Iraq’s Finance Minister Ali Allawi said in an online interview with the Atlantic Council, an American international affairs think tank, on Friday that Baghdad could “significantly” reduce its heavy reliance on Iranian energy imports by as soon as next year by linking up with the Persian Gulf power grid.

“This has been going on for several years now, it is unlikely we can find a short term substitute, but a medium-term effort can be done by linking the Iraqi grid to the Persian Gulf grid,” Allawi said. “The dependence on Iranian electricity and energy will begin to trail down significantly sometime next year.”

The US State Department said last month that the six countries that make up the Persian Gulf Cooperation Council Interconnection Authority — Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the UAE — had affirmed their shared support for the project to supply electricity to Iraq.

Allawi was part of a delegation accompanying Prime Minister Kadhimi on his visit to Washington where the US pressed the Iraqi side on allowing energy investment by Saudi Arabia.

“Saudi Arabia is to invest in the Iraqi energy and gas sector, including Saudi-owned companies Aramco and Aqua group,” Allawi confirmed in the Atlantic Council interview.

Iraqi Oil Minister Abdul-Jabbar was quoted on Tuesday as saying that at least 80 percent of the gas projects in Iraq are already under implementation.

But a halt to imports from Iran will come no sooner than five years from now. “We will not import gas by 2025,” he told al-Iraqia TV in an interview.

Iraq imports 1,200-1,500 megawatts a day of electricity from Iran, in addition to 38 million cubic meters of natural gas to power 40 percent of its electricity generation.

So far, the United States has “granted” nine rounds of waivers to allow Iraq to continue imports from Iran. The current waiver, issued in May, gives the country 120 days to continue its energy imports without being punished for trade with Iran which came under the most aggressive US sanctions in 2019.

Iraqi officials have complained that American demand acknowledges neither Iraq’s energy needs nor the complex relations between Baghdad and Tehran.

In addition to natural gas and electricity, Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, and air conditioners.

Last month, Iraqi Prime Minister Kadhimi visited Tehran “to strengthen historical ties” between the two countries. The two sides, he said, discussed implementing agreements between them, including connecting their railway through Khorramshahr in Iran and Basra in Iraq.

Iranian Energy Minister Reza Ardakanian said the two neighbors had finalized two agreements to rehabilitate and develop the Arab country’s power grid.

“It was decided that the contracts related to reducing losses on the electricity distribution network in the provinces of Karbala and Najaf, as well as the contract for repairing Iraq’s distribution transformers would be finalized and signed,” the Iranian minister said.

Iran’s gas exports to neighboring countries had never reached 70 million cubic meters per day, Shana quoted Mohammadreza Joolaei as saying.

The official put at 75 mcm the average figure for Iran’s current daily gas exports to Iraq and Turkey.

Joolaei said this record was set at a time when electricity consumption was (and still is) at its peak in Iran in summer and most of the country’s gas refineries have been undergoing annual overhaul.

Although consumption by the country’s power plants has also been at its peak over the past few weeks, gas has been fully supplied to them, eliminating the need to use liquid fuels, he added.

The official said Iran currently exports natural gas to Iraq and Turkey and is ready to provide any amount requested by the importers.

In June, NIGC Managing Director Hassan Montazer-Torbati announced that Iran’s annual natural gas exports to the neighboring countries increased by 3.6 billion cubic meters in the previous calendar year (which ended on March 19), registering a 26 percent rise year-on-year.

Commenting on the domestic gas industry’s new records in production, transmission, distribution and exports during the previous year, Montazer-Torbati said the unprecedented increase in the country’s natural gas exports was achieved despite the significant rise in domestic consumption.

In May, he said Iran’s long-term gas contracts would probably undergo essential changes in the aftermath of the outbreak of the coronavirus pandemic.

The official said that Iran would introduce new pricing mechanisms in its gas export deals in the future, without elaborating on how they would work.

Speaking in an exclusive interview with Iran Daily, Jalal Ebrahimi added holding negotiations is the best approach toward solving the problem.

In February 2020, quoting an informed official, media wrote that Turkey had, in an official letter, requested Iran to consent to a three-month postponement of the payment of its gas exports by Turkey. The request, however, was rejected by the National Iranian Gas Company. A few days later, the gas pipeline between Iran and Turkey was damaged in the latter’s territory, 900 meters off the common border, where the responsibility of ensuring security falls on Turkish military forces.

Since the occurrence of the incident, gas exports to Turkey from Iran have been stopped. Turkey has not taken any step to fix the pipeline. Following the suspension of Iran’s gas exports, Turkey’s Petroleum Pipeline Company (BOTAS), citing the price review clause‌ in the contract, asked Iran to give a 22 percent discount on its gas price.

Commenting on the broad historical background of friendship between Iran and Turkey and the two countries’ economic relations, Ebrahimi said the two neighbors have stood by each other since a long time ago and cooperated with one another through the Silk Road.

He added on this basis, Iran has always sold its gas to Turkey at a price lower than average international rates, without making its neighbor beholden to itself and based on the principle of good neighborliness.

Shifting to the numerous trade and economic agreements signed between the two countries, Ebrahimi said these treaties as well as religious and cultural commonalities and the principle of good neighborliness have always been taken into account in the relations between Iran and Turkey.

Shifting to the pause in the gas exports, he added that the pipeline was damaged by the opponents of the Turkish government in eastern Turkey.

“This has become a pretext for Turkish officials. Although as per the contract, they should immediately eliminate any problem leading to halt in gas exports, they have taken no step to this end so far while four months have elapsed since the incident.”

Commenting on the same issue, earlier, Iranian Oil Minister Bijan Namdar Zanganeh said although the gas pipeline between Iran and Turkey can be fixed in a few days, the Turkish side has not yet done it.

Saying that he is not informed about the reasons for the delay in fixing the pipeline, Zanganeh noted, “Even, we expressed our willingness to repair it for them, but they did not accept the offer.”

Saying that fixing the pipeline is Turkey’s responsibility, Ebrahimi added the incident did not take place in the Iranian territory where the country’s armed forces are in charge of ensuring security.

In gas export contracts, guaranteeing the security of a pipeline between two countries is a shared responsibility, with each side obligated to protect the section lying in its territory, he stressed.

“Iran has always carefully supervised the flow of gas exports to Turkey. So far, no major problem has emerged in the process of pumping gas from Iran to Turkey. Iran has immediately resolved the minor problems, although their number has been very limited, as it knows that gas is an essential item.”

On the other hand, he said, although Iran is ready to help Turkey fix the pipeline and has expressed it, the other side has so far shown no willingness in the offer.

Ankara is, at present, seeking to further expand its relations with Moscow and sees Russia as a lucrative market for its foodstuff, Ebrahimi noted, saying in addition, Turkey seeks to attract Russia’s support with regard to issues pertaining to Syria.

“Gas [trade] is among the issues that help Turkey become closer to Russia. Turkey is currently importing gas from Russia and seeks to increase its volume.”

Russia is, at present, the biggest gas exporter to Turkey, meeting almost half of the country’s demand for fossil fuel. Russia is followed by Iran and Azerbaijan with the former supplying 16 percent of Turkey’s gas demands and the latter 10 percent of it.

“Trade is taking opportunities. Turkey seeks to safeguard its own interests. However, it should reconsider the issue of gas imports from Iran. I don’t say that Turkey should stop trade with Russia or purchasing gas from it. However, it is required to take the principle of good neighborliness into account.”

Iran has never closed its doors to Turkey, will never do such a thing, and will always see the country as a neighbor and friend, he added.

“We must not forget that a few years ago, when Russia’s gas exports to Europe were stopped in winter, and European states were placed under considerable economic pressure for meeting their needs, the ground became prepared for a rise in the price of gas exports to this region.”

Russia supplies over 18 percent of Europe’s natural gas. This comes as, gas disputes between Russia and Ukraine over the past years have, on numerous occasions, led to a halt in the former’s gas exports to Europe.

The main reason for the tensions between Moscow and Kyiv was the separation of the Crimean Peninsula from Ukraine and its joining to Russia following a referendum in 2014.

“Iran has always taken business ethics into consideration in trade with, particularly, its neighbors and has always helped Turkey meet its energy needs. It has never sought to stop gas exports to Turkey in winter to raise the price.”

The Iranian government and people are not interested in the occurrence of any problem in trade between the two countries, he gave the assurance.

“I believe that the two countries should maintain their brotherly ties and refrain from exchanging long-term interests with short-term ones. We are required to maintain our friendship in tough times. I think that the two countries are currently in negotiation with each other to resolve the gas trade issue, which is the best approach and will eventually lead to an agreement between them.”

The gas flow has stopped since March 31 when an explosion blew up the pipeline through which Iran sells about 10 billion cubic meters (bcm) a year of gas to Turkey under a 25-year supply deal signed in 1996, Press TV reported.

The pipeline has been the target of frequent attacks by PKK terrorists, but Turkey’s apparent vacillation on repairing the damaged section has surprised Iran.

Interim caretaker of the Iranian Gas Transmission Company Mehdi Jamshidi-Dana said on Monday that Turkey is not receptive to Iran’s readiness to repair the pipeline.

Jamshidi-Dana, who was the former director for dispatching at state-owned National Iranian Gas Company, also dismissed Turkey’s characterization of the pipeline explosion as a force majeure event which excused the country from paying for gas not taken during the halt.

“Iran has announced in writing that it does not accept this is a force majeure event. In several correspondences, we said Iran is ready to repair this pipeline within eight days but the Turkish side didn’t welcome that,” he said.

Jamshidi-Dana said he hoped Ankara would not go to such lengths which might force Tehran to take the issue to international arbitration – mirroring Turkey’s own action in 2016 when it secured discounts for the gas supplied by Iran after going to a court of arbitration.

The official said “friendly relations and professional behavior by Turkey” would hopefully do away with such a need.

“We predict that the repair of the Iran-Turkey gas pipeline will end in the month of Tir (June 21-July 21) and gas flow will resume,” he said.

Turkey is Iran’s biggest gas client and a major trade partner, which has balked at the United States’ unilateral sanctions on the Islamic Republic, but it also knows which side of its bread is buttered.

Iran’s Minister of Oil Bijan Namdar Zanganeh has confirmed that Turkey was not showing an interest despite the Islamic Republic’s offer of help to repair the damaged section inside Turkish land.

According to S&P Global Platts, Turkey is delaying the completion of repairs to the gas pipeline in an apparent attempt both to curry favor with Washington and to pressure Tehran to further reduce its prices.

Turkey has taken 23 cargoes of US LNG already in 2020, compared with 13 for the whole of 2019 and just four in 2018, the commodity pricing agency said.

It imported 7.7 bcm of gas from Iran in 2019, or some 17 percent of its total gas imports, while their long-term contract allows Ankara to buy 9.6 bcm a year, the agency added.

Turkey’s Deputy Energy Minister Alparslan Bayraktar left nothing to the imagination when he told a conference in Istanbul in February that Ankara planned to use the availability of US spot LNG to persuade its long-term gas suppliers to lower their prices.

Turkey’s other major gas suppliers are Russia and Azerbaijan. Because of their cultural and linguistic closeness, Azerbaijan provides the cheapest gas among the suppliers, piping 6.6 bcm of gas annually from the Shah Deniz field in the Caspian Sea.

Russian gas supplies to Turkey declined by 35.3 percent to 15.51 bcm last year, Gazprom said in February.

US inroads are in line with President Donald Trump’s “energy dominance” agenda that seeks to advance diplomatic and policy objectives through rapidly expanding American oil and gas exports.

Turkey’s relations with the US have been at a historic low for the past two years, but Trump and his Turkish counterpart Recep Tayyip Erdogan have spoken by telephone at least three times this year with the aim of patching up their divisions.

A key plank of their discussions is reportedly Trump’s offer to sign a $100 billion trade agreement with Turkey, making US LNG a potential threat to piped gas from Iran and Russia.

Nevertheless, Iran’s supply contract with Turkey runs until July 2026 and much of the knee-jerk reaction relates to long-term ramifications, including the prospect of losing an important regional market.

Iran may lose its biggest gas market to rivals, which could cost the country $150 million-$200 million in lost revenue per month, Fars news agency warned in an analysis last month.

Jamshidi-Dana said talks for an extension of the contract are underway, though progress is being affected by the global pandemic situation.

“Negotiations to sign a new contract are being carried out slowly because of the coronavirus outbreak. But our examinations show that imports of Iran’s gas have advantages for them. It’s still not clear what a new contract would be. But Turkey undoubtedly needs to import gas from Iran,” he said.

“Conditions governing long-term gas export contracts would probably undergo essential change after corona (virus),” said Hossein Montazer Torbati, the deputy oil minister of Iran, who heads the National Iranian Gas Company (NIGC), Press TV reported.

The comments come after reports in recent days suggested that Turkey, the main customer of Iran’s natural gas, is unwilling to repair a pipeline damaged in an explosion in late March as it seeks lower prices in the light of a recent fall in international crude prices.

Gas export deals designate oil prices as a benchmark for determining gas prices although any price change would need at least six months to take effect.

Montazer told the semiofficial ILNA news agency that Iran would introduce new pricing mechanisms in gas export deals in the future, without elaborating on how they would work.

He said Iran would also start negotiating with Turkey about an extension to the current gas export deal beyond 2025.

The NIGC chief said Iran would always remain a reliable supplier of natural gas to Turkey despite changes that are taking place in the country’s energy market where the government is allowing more activity for the private sector suppliers.

On Iran’s plans for gas exports to new regions and countries, Montazer Torbati said Tehran is studying plans to deliver gas to areas bordering Iran in the semi-autonomous region of Kurdistan in neighboring Iraq.

The official said authorities in the Iraqi Kurdistan have submitted several requests for starting gas supply from Iran to the bordering regions.

He also said that the Iranian Oil Ministry’s Department for International Affairs is currently working on a contract for launching gas exports to Oman.

“Of the two last platforms at South Pars gas field, one was installed today and the next platform will be installed before (March 20),” Iran oil minister,  Zanganeh said, according to Reuters.

“And so we will have all the platforms of the 27 phases of South Pars, which will enable us to produce more than one billion cubic meters of gas per day.”

South Pars, which Qatar calls North Field, is the world’s largest gas field and is shared between Iran and Qatar.

Separately, Zanganeh said that coronavirus is to blame for price fluctuations in the oil market and economy in the globe as well.

Several countries in the region have closed their borders with Iran and put in place air travel restrictions after people infected with coronavirus arrived from the Islamic Republic by flights or so.

Despite the air travel restrictions, Zanganeh said that he would attend a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna next week using Iran Air flights.

Iran has various gas resources and 95 percent of the population has direct access to the gas network, Zanganeh said, reported IRNA.

No country in the world has as many natural gas vehicles as Iran, he boasted.

Iran has discovered new huge oilfield with an estimated 53 billion barrels of crude oil in the southern province of Khuzestan.

The oilfield named Namavaran is one of the biggest ones discovered in Iran, the minister noted.

The field has an area of 2,400 square kilometers and is about 80 meters deep, Zanganeh explained.

The Pars Oil and Gas Company (POGC) CEO said in November that daily gas extraction from the South Pars Gas Field would reach 680 million cubic meters (mcm) when new platforms become operational.

Mohammad Meshkinfam added the current gas extraction from the field, jointly shared with Qatar, stands at 630 mcm per day.

According to the plans drawn up for the year to March 2020, domestic companies are assiduously implementing development projects in phases 13, 14, 22 and 24, he added.

The managing director stressed that since SP is a joint gas field, it is of great importance to focus on raising gas extraction from it, adding among the company’s major goals in the year to March 2020 is to complete the development projects of the offshore sections of the phases 13, 14, 22 and 24.

He added gas extracted by the two main platforms of the phases 23 and 24B will be processed and injected into the nationwide network after the completion of hookup and commissioning operations in the two phases.

After coming on stream, the new platforms of the phases 22-24 will raise daily gas production in the field by 28 mcm (one billion cubic feet).

Describing the progress of the operations for development of South Pars Phase 14 as favorable, Meshkinfam said at present, platform B14 of the offshore section of the phase is fully operational and as soon as the completion of a five-kilometer pipeline between phases 14 and 12 becomes operational, it will begin gas extraction.

He noted that the pipeline will begin gas transfer within two weeks.