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Iraq to pay for Iranian gas with crude oil: PM

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Iraqi Prime Minister Muhammad Shia’ al-Sudani

Iraq has reached an understanding with Iran to trade its crude oil for Iranian natural gas supplies, according to Iraqi Prime Minister Muhammad Shia’ al-Sudani who says the mechanism would settle a long-running dispute with Tehran over Iraq’s failure to pay debts related to previous imports of energy.

Sudani said late on Tuesday in a televised address to the Iraqi people that Iran would resume gas supplies to Iraqi power plants under the new deal which he said would mean an end to the recurring power cuts that have caused problems in the Arab country amid sweltering summer heat.  

“It was agreed with Iran to provide it with crude oil in exchange for gas, and the decision will ensure the continuity of the gas supply, and thanks to it, the current (electricity) crisis will end,” he was quoted as saying by the official INA agency.

The Iraqi premier said Iran had agreed to increase daily gas supplies to Iraq, which had been cut as of July 1 by nearly a half to around 25 million cubic meters (mcm), by at least 10 mcm under a first phase of the new agreement.

US sanctions on Iran has made Iraq unable to pay some 11 billion euros ($12.1 billion) that it has deposited in an account in the Trade Bank of Iraq for imports of gas and electricity from Iran.

Farhad Alaaldin, an advisor to Sudani, admitted on Wednesday that the funds had not been paid to Iran despite promises last month by Iraqi and US authorities suggesting Tehran would be able to access the funds to pay for imports of non-sanctioned goods.

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