Iran: Selling Gas to Iraq?

22 Jul

Ahmadinejad visited Iraq recently, on what was his last foreign trip as president. 

One of the mentioned achievements from this trip was reported as being the finalization of a contract to:

export gas to neighbouring Iraq, worth 3.7 billion dollars a year.

This is a major achievement for Iran as Iraq has its own gas reserves. According to a survey by British Petroleum (BP) in 2011:

The country holds an estimated 111.9 trillion cubic feet of proven reserves, ranking it 11th largest worldwide.

Since Iraq has its own gas reserves, then why buy from Iran?

Price could have played a major role in this decision.

The possibility that Iran offered a lower than market price to the Iraqis can not be ruled out. Having Iraq depending on Iran for its gas supplies will give Tehran an important leverage – or rather more leverage over the Iraqi government. Therefore it could make sense for Iran to underbid other suppliers, even if it means making less money.

Or, perhaps this announcement was nothing more than a ceremonial deal for the sake of Ahmadinejad’s legacy. In other words, don’t rule out domestic politicking as being a major factor.

Much like the doomed Iran – UAE Crescent gas deal, we could find out soon.

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