Iran said on Thursday it has received $1.6 billion from Iraq to settle part of the debts it has sought from its neighbor since 2020 for the supply of gas.
“In light of the active energy diplomacy, and after months of negotiations, $1.6 billion in arrears... for gas exports to Iraq have been received,” Iranian Oil Minister Javad Owji tweeted, Tasnim news agency reported.
“Since the beginning of the year, compared to 2021, the country's gas export volume has increased by 25% and the collection of revenues has also increased by 90%,” Owji added. The Iranian new year begins on March 21.
Iraq’s Electricity Ministry spokesman Ahmed Moussa said the government has started paying off its debts for gas imports from Iran by borrowing from the Trade Bank of Iraq, adding that the Ministry of Finance deposited the money in the Credit Fund.
“We are still relying on Emergency Support Law to repay our dues,” Tasnim quoted Moussa as saying.
Baghdad had been scheduled to pay that amount to Tehran before June.
The debt dates back to 2020, but payment was stalled amid sanctions against Iran by the United States.
Iran’s deputy oil minister, Majid Chegeni, said last month that an agreement had been reached with Iraq for it to pay $1.6 billion in arrears by the end of May.
Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet energy needs.
Iran provides a third of Iraq’s gas and electricity needs, but supplies are regularly cut or reduced, aggravating shortages caused by daily load shedding.
Separately, Iranian state news agency IRNA reported on Thursday that Iranian authorities have seized a vessel carrying 90,000 liters of smuggled fuel in the waters around Kish Island in the Gulf.
The captain and five other crew members were issued with criminal warrants and have been detained, IRNA added.
Iran, which has some of the world’s cheapest fuel prices due to heavy subsidies and the fall of its currency, has been fighting rampant fuel smuggling by land to neighboring states and by sea to Gulf Arab countries.