The U.S. has ceased to renew waivers for Iranian electricity imports, potentially affecting Iraq, which relies on Iran for a significant share of its gas and electricity. Experts warn of potential supply chain disruptions that could lead to energy shortages. Iraq plans to mitigate these impacts by increasing fuel oil supplies and enhancing grid connections with Saudi Arabia while also navigating unresolved disputes with the Kurdistan Regional Government.
The U.S. decision not to renew waivers for Iran is focused solely on electricity imports, while gas imports may still be technically exempt. However, there are significant concerns regarding Iraq’s dependence on Iran for 22% of its gas and electricity, highlighting Iraq’s difficulties in sustaining its power grid without alternative sources.
Iman Nasseri from FGE indicated that U.S. sanctions could impact Iraq’s payment mechanisms for gas, which remains crucial for their energy supply. A spokesperson from Iraq’s Electricity Ministry warned of a potential 30% loss in electricity capacity due to gas import disruptions, which could provoke unrest in cities like Basra that have experienced previous blackouts.
To address these challenges, Iraq is shifting from gas to liquid fuels to mitigate shortages and has requested an increase in fuel oil supplies from 35,000 to 100,000 barrels per day. Additionally, Iraq is working to enhance its electricity grid connections with Saudi Arabia and invest in associated gas projects to lessen its reliance on Iranian imports.
This decision aligns with President Trump’s “maximum pressure” campaign aimed at Iran, as stated by U.S. National Security Advisor Mike Waltz. He suggested that Iraq should strengthen ties with U.S. energy firms and collaborate with the Kurdistan Regional Government (KRG) to resume operations of the Iraq-Turkiye pipeline, which has been inactive due to ongoing disputes.
Despite ongoing U.S. diplomatic efforts, two rounds of discussions between Baghdad and Erbil have not rectified disputes regarding payment mechanisms and oil contracts. However, sources indicate that there still exists the potential for a compromise despite current tensions.
In summary, the U.S. decision to cut waivers on Iranian electricity imports poses a significant challenge for Iraq’s energy stability, given its reliance on Iranian gas. Iraq is actively seeking alternative energy sources, including increasing fuel oil supplies and building connections with Saudi Arabia, while also attempting to resolve disputes affecting oil contracts with the Kurdistan Regional Government. The outcome of these efforts will be crucial in determining Iraq’s energy future amidst Iran’s looming sanctions.
Original Source: shafaq.com
