Iran-Iraq deal signed, Bahrain freezes Iran gas imports

Iran-Iraq deal signed, Bahrain freezes Iran gas imports

Iran will import gas to Iraq, pending an MoU approval while Bahrain freezes gas imports from Iran, citing Iran's "interference" in the events within the Gulf Arab state.

May 23, 2011 11:04 by Reuters

Iraq’s electricity ministry said on Sunday it has signed an initial agreement with Iran to import natural gas for power generation.

The news follows a Reuters report yesterday that Bahrain has frozen plans to import natural gas from Iran over what it sees as Iranian “interference” in the Gulf Arab state.

Under the Iran-Iraq MoU, which still needs the approval from the Iraqi cabinet and parliament, Iran will install a pipeline through Iraq and supply it with gas that would be used to feed two power plants in Baghdad, the electricity ministry said.

Iraq will buy 25 million cubic metres of gas each day from Iran under the five-year deal, according to international prices, which would generate 2,500 megawatts.

The gas pipeline will pass through Iraq’s Mansuriyah gas field near the Iranian border in volatile Diyala province. The gas would supply a power plant in Sadr City in northern Baghdad, and another plant in the northern outskirts of Baghdad. The pipeline will be completed in 18 months.

Iraq has struggled for years with power blackouts and risks years more of electricity shortages. Eight years after the US-led invasion that toppled Saddam Hussein, Iraqis receive only a few hours of power a day from the national grid and the shortage has been a key complaint at recent nationwide protests.

The OPEC member signed an initial contract with South Korean group KOGAS , Kuwait Energy Company, and Turkey’s state-owned TPAO last year to develop the Mansuriyah natural gas field.

Meanwhile, Bahrain’s Foreign Minister Sheikh Khaled bin Ahmed al-Khalifa said that “the project to import Iranian gas is currently halted because of the blatant Iranian interference”, Bahrain’s state news agency BNA reported.

Sheikh Khaled also told the daily al-Watan that “the repeated provocative statements from Tehran would no doubt be an obstacle to any agreement between the two parties”, BNA added, without giving details of the delayed deal.

“However, the foreign minister denied that the project … was cancelled altogether, saying that the kingdom is looking forward to improved relations with Iran,” BNA said.

In June, Iran said it planned to sign a deal on exporting gas to Bahrain and that Bahrain would invest in the giant South Pars natural gas field in the Gulf.

Bahrain signed a preliminary agreement with Iran in 2008 to import 1 billion cubic feet of natural gas per day.

Bahrain suspended gas talks in February 2009 for several months after an Iranian official reportedly made comments that appeared to question the small island kingdom’s sovereignty.

Iran has the world’s second largest gas reserves but has struggled to develop its oil and gas sector as Western firms steer clear because of UN and US sanctions over Tehran’s nuclear energy programme.