Iraq has signed a memorandum of understanding (MOU) with Iran for the import of 5 to 10 million cubic meters a day (cm/d) of natural gas, state-run Shana news agency reports.

The deal was announced by Javad Oji, managing director of the National Iranian Gas Company (NIGC) on 1 August following the visit of an Iranian oil delegation to Iraq. Negotiations focused on meeting Iraq’s power generation needs.

The agreement lays the ground work for a contract to export 5 to 10 million cm/d for a period of five to seven years. Technical, financial and legal working groups will now be established by the two countries. Oji said that Ilam province on Iran’s western border with Iraq’s Maysan province was the best route for the exports.

Despite its considerable gas reserves, estimated at 29.6 trillion cubic metres (tcm), almost 16 per cent of total global reserves Iran plays a relatively small role in the global gas market. The majority is consumed domestically. Exports to Turkey, Iran’s main gas export market, stood at 30 million cm/d in February this year (MEED 23:2:10).

Iraq on the other hand has only 3.2 tcm, much of which comes from associated fields. Almost 60 per cent is flared due to the lack of infrastructure to deal with it. The country suffers severe power shortages due to its ongoing lack of gas feedstock.