Iran, Iraq reach deal over Kirkuk pipeline

Iran says it has reached an agreement with Iraq to construct a pipeline that would export crude oil from the northern Iraqi fields of Kirkuk via Iran.

The announcement was made by Iran’s Petroleum Minister Bijan Zanganeh after a meeting with his visiting Iraqi counterpart Jabbar al-Luaibi.

Zanganeh also added that agreements had been reached with Iraq about an international company that will carry out a feasibility study of the project.

Iran and Iraq signed a basic agreement in February that envisaged exporting Iraqi oil through the Iranian territory – a scheme that would remove Baghdad’s reliance on the Kurdistan Regional Government (KRG) to export its oil through a pipeline to Turkey.

This came against the backdrop of a long-standing dispute between Baghdad and the KRG over a scheme to pipe Iraq’s oil from Kirkuk to the Turkish Mediterranean port of Ceyhan.

The flow of the pipeline was interrupted for several months last year as the Iraqi government disagreed with the Kurds on their share of the national oil revenue and budget, Reuters wrote in a report on Iran-Iraq agreement.

Zanganeh further emphasized that Iran would begin exporting gas to the Iraqi city of Basra in the coming months.

He said there had been some problems in receiving payments for current gas exports to Iraq via banks and that Iran was receiving cash payments.

Iran started a much-awaited project to export 7 to 8 million cubic meters per day (mcm/d) of natural gas to Iraq’s capital Baghdad in June. The exports are expected to reach as high as 35 mcm/d in the near future.

Gas exports to Iraq – which are meant to address the country’s acute electricity shortfalls – started after two years of negotiations between Tehran and Baghdad.

Iran and Iraq initially signed an agreement in 2013 based on which the Islamic Republic would export natural gas to power stations around Baghdad through a 270-kilometer pipeline.

Iran has also signed another contract to export around 50 mcm/d of gas to Iraq’s southern port city of Basra.

Once the Basra pipe is made operational, Iraq’s total gas imports from Iran would reach around 80 mcm/d.