Iran agrees to start exporting gas to Iraq for $3.7 billion/year

Iran has announced it is exporting natural gas to Iraq in a deal that will earn the Islamic Republic a reported $3.7 billion per year.

Amir Hossein Zamaninia, the deputy petroleum minister for international affairs in Iran, said that natural gas exports had already begun.

The project is estimated to earn Iran $3.7 billion a year in revenues.

Zamaninia added that Iran will initially send approximately 7 million cubic meters (mcm) per day but it will eventually increase the amount to 35 mcm daily.

Iran and Iraq signed a 2013 agreement regarding Iran’s export of natural gas, but the pipeline wasn’t completed until June 2016 because of security issues, and then Tehran was awaiting payments from Baghdad. The agreement included two contracts, one to send exports to the Iraqi capital of Baghdad and another contract to send exports to the southern city of Basra via pipeline.

The pipeline connects the largest natural gas field in the world, the South Pars/North Dome Gas Condensate field, which is shared by Iran and Qatar, to the Iraqi city of Basra. The Basra Province has some of the country’s largest natural gas power plants and a processing plant.

Iraqi Prime Minister Haider al-Abadi traveled to Tehran on Tuesday to meet with Iranian Supreme Leader Ayatollah Ali Khamenei, President Hassan Rouhani, and Vice President Ishaq Jahangiri.

During with the press conference with Jahangiri, Abadi said the pipeline would be opening.

Though Iraq is a major OPEC oil producer, the country has been incapable of meeting its residents’ electricity consumption. Iraq’s peak electricity demand was 21,000 megawatts in the summer and the grid is only able to supply about 13,000 megawatts, Reuters reported in April 2016.

The average Iraqi household receives power for just 7.6 hours a day, according to recent data from a report by the Iraq Energy Expo. As a result of the shortfall, homes have to obtain half their power needs from generators.

The global energy consortium British Petroleum in its annual report on natural gas reserves released earlier this month put Iran