Dubai — Iraq's federal government could wean itself off Iranian energy imports by taking advantage of gas production in the semi-autonomous Kurdistan region, a US official said Nov. 23, as OPEC's second largest oil producer continues to come under pressure from Washington to part ways with Tehran.
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"The US remains a steadfast champion of Iraqi sovereignty and continues to oppose Iran's efforts to undermine it," Mark Menezes, US Deputy Secretary of Energy, told a virtual Kurdistan conference organized by the US-Iraq Business Council.
"The more that Kurdistan develops its gas resources and the closer it gets to being a regional energy hub the less dependent federal Iraq will be on Iranian gas imports."
Former Iraqi oil minister Thamer Ghadhban and officials from the Kurdistan region in northern Iraq, which is self-sufficient in gas, had discussed in April Baghdad's potential use and investment in Kurdish gas. However, talks didn't lead to any concrete steps because a new government was appointed in May and the Kurdistan Regional Government continues to have issues with Baghdad over its oil sales and receiving its share of federal revenues.
Iraq relies on Iranian electricity and gas imports due to chronic power shortages that have in the past led to deadly protests and extensive flaring of associated gas.
Iraq is the world's second worst flaring nation after Russia, burning some 18 billion cu m (632 billion standard cubic feet) in 2019, according a World Bank study published July 21.
Associated gas production is further restricted by the country's adherence to OPEC+ cuts.
The country has been receiving US waivers to continue to import Iranian gas and electricity since Washington re-imposed sanctions on Tehran's energy sector in 2018.
The US State Department said on Nov. 20 it granted a 45-day waiver extension to Iraq allowing it to keep paying for electricity imports from Iran, however the period was reduced from the prior 60-day extension.
The State Department has touted the waiver extensions as a sign of diplomatic success between Washington and Baghdad. The governments signed several energy agreements during Iraqi Prime Minister Mustafa al-Kadhimi's visit to Washington in August.
During Kadhimi's visit to Washington, the Iraqi electricity and oil ministries signed deals with several US companies worth up to $8 billion. US Secretary of Energy Dan Brouillette said at the time the agreements would be key to Iraq becoming energy self-sufficient.
Kurdistan Regional Government is ready to export gas to the rest of Iraq, its Prime Minister Masrour Barzani told the virtual conference.
"We hope to become a regional hub for gas production and storage with plans to export to other parts of Iraq and beyond," Barzani said. "We are now exporting electricity to other parts of Iraq."
Erbil will continue to hold talks with Baghdad to resolve outstanding issues, including their share of the federal revenues, he said.
"We are working hard to ensure that our relationship with the federal government in Baghdad is fair and delivers a real outcome," Barzani said. "This is not always straight-forward and we have our differences. But, I am committed to resolving our outstanding issues including around the KRG's share of the federal budget."