The Iraqi Ministry of Electricity announced that a new 5-year contract had been signed to import natural gas from Iran, after the approval of the US administration earlier in March. This decision comes to meet Iraq’s needs for natural gas to operate electric power stations.

Under this new agreement, up to 50 million cubic meters of natural gas will be imported daily from Iran, and according to the official Iranian News Agency (IRNA), Iran’s financial dues for gas supplied to Iraq will be transferred through a mechanism that includes different types of payment for bills.

This agreement comes after removing the obstacles that hindered Iraq from paying its debts to Iran. Observers expected that it would allow Iran to receive more than $10 billion of its frozen debt due to US sanctions.

Iraq's import license for electricity and gas from Iran is renewed every six months. The Iraqi government transfers funds owed in Iraqi dinars to the Iranian bank account in the Commercial Bank of Iraq. Despite this process, Iranian funds remain practically unused in international transactions due to the value of the Iraqi dinar, which is not accepted by international markets.

The American ambassador to Iraq indicates that the United States seeks to reduce Iraq's dependence on electricity and gas imported from Iran, as part of its efforts to achieve energy independence for Iraq.

It is worth noting that this agreement comes in the context of the continued export of Iranian gas to Iraq since 2017. Iran supplies Iraq with an average of 25 million cubic meters of gas per day, and in recent years, Iran has sometimes reduced the volume of gas exports to Iraq, which has led to crises in electricity supply in Iraq.

This agreement between Iran and Iraq to exchange gas for gasoline and diesel is an important step that may enhance economic cooperation between the two countries.