US President Donald Trump reimposed illegal unilateral sanctions on Iran’s energy and finance sectors on Nov. 5 following his May decision to abandon a UN-endorsed landmark 2015 nuclear deal between major powers and Tehran, AFP reported.
But he gave Iraq a 45-day waiver to continue buying electricity and natural gas to generate it from its eastern neighbor.
Iraq was expected to use that time to submit a plan on how it would wean itself off Iranian supplies.
In the days leading up to the deadline, Prime Minister Adel Abdel-Mahdi said a delegation of Iraqi officials would travel to Washington to discuss sanctions.
A government source involved in the talks with the US said the delegation had secured a 90-day extension so Iraq could keep buying both Iranian electricity and gas.
Asked whether the US had pressured the Iraqi delegation to partner with US companies to fill the eventual gap, the source said the issue was part of “complicated discussions.”
Iraq faces a chronic power shortage that often leave homes without electricity for as much as 20 hours a day and was a key driving factor behind summer mass protests.
To cope with the shortages, Iraq pipes in up to 28 million cubic meters of Iranian gas a day for power generation and also directly imports up to 1,300 megawatts of Iranian electricity.
Last week, US Energy Secretary Rick Perry discussed sanctions with Iraq’s oil and electricity ministers in Baghdad, and said Iraq should partner with US companies to become energy independent.
“Working together, the US and Iraq can develop Iraq’s oil, gas and water industries,” Perry said.
Iraq’s Electricity Ministry said it could stop relying on Iranian electricity within two years, but that halting gas imports would be much more difficult.
Hayan Abdul Ghani, head of state-run South Gas Co. (SGC), told reporters on December 6 that Iraq needed at least two years to boost the country’s gas production to stop importing Iranian gas.
“Iraq’s current production of gas is not enough to meet our power stations’ demand and therefore we are still importing gas from Iran. We need at least 24 months to operate new gas projects and start production,” he said.
Trade between Iran and Iraq stands at $12 billion, but Baghdad is reportedly under pressure from the US to stop business dealings with Tehran.
Iran is currently Iraq's top trade partner, having sharply increased their trade exchanges in recent months despite US sanctions on the Islamic Republic.
Iranian Ambassador to Baghdad Iraj Masjedi said late last month that the two neighbors planned to raise their trade to $20 billion a year.
“The Iraqis need Iran’s natural gas, electricity, food items and industrial materials. If these exports are stopped, there will be problems not only for Iran but also for the Iraqis,” he added.