Questions remain even as Iran, Iraq resume oil swap

Press TV – Iraq and Iran have reportedly begun exchanging crude oil following a 10-day halt which came after the Kurdish Regional Government (KRG) suspended the swap earlier this month.

Crude from the Kirkuk field in northern Iraq is being shipped by truck to Iran but the KRG’s ministry of finance and economy ordered border crossings not to allow the passage of oil tankers into Iran as of February 15.

On Tuesday, Iraqi media reports said tanker trucks had resumed oil exports to Iran after the KRG “relaxed” a recent order that had halted the cross-border crude and fuel trade.

“After receiving a new order from the KRG Ministry of Natural Resources (MNR) on Feb. 20, border officials at the three main crossing points between Iraqi Kurdistan and Iran began letting tanker trucks through,” they said.

Flames emerge from flare stacks at the oil fields in Kirkuk, Iraq on October 18, 2017. (Photo by Reuters)

No reason was given for the halt but the decision came after President Donald Trump voiced discontent over KRG’s oil sales to Iran last month.

After Trump’s remarks, Iranian Foreign Minister Muhammad Javad Zarif visited Iraq and the semi-autonomous Kurdistan region where he said “no sanctions will affect relations between Baghdad and Tehran”.

The swap deal was agreed at the end of 2017, under which Iraq was about to truck 60,000 barrels per day (bpd) of crude oil to Kermanshah in western Iran. Iraq’s southern Basra port would receive the same amount of crude from Iran either by tanker or pipeline.

Last week, KRG spokesperson Safin Dizayee was quoted as saying that the regional Kurdish government was determined to maintain economic connections with Iran.

“We will respect the relationship we have – especially since it has developed over many years – and we will never abandon it. We cannot abandon our historic connection just because of a political decision,” he said.

Relations between the two neighbors, however, are increasingly coming under pressure from the US which imposed unilateral sanctions on Tehran in May after abandoning an international nuclear agreement.

Earlier this month, the New York Times reported that Iraq was pushing back on US pressures to stop buying natural gas and electricity from Iran.

Gas imports from Iran generate as much as 45 percent of Iraq’s 14,000 megawatts of electricity consumed daily. Iran transmits another 1,200 megawatts directly, making itself an indispensable energy source for its Arab neighbor.

Last month, the US State Department announced a 90-day exemption to allow Iraq to continue crucial electricity and gas imports from Iran.

According to the New York Times, the Trump administration has told Iraq’s leaders that they have until late March to end electricity purchases but Baghdad says there is no easy substitute because it would take three years or more to adequately build up Iraq’s energy infrastructure.

Dizayee said the future of the KRG’s contracts with Iran depended on the outcome of talks between the central Iraqi government and the US.

“As far as I am aware, there are talks between the government in Baghdad and the Americans regarding the sanctions on Iran, but that no decision has been made by the central government,” he said.