The two countries signed a four-year deal yesterday that will see Iraq buy around 850m cubic feet a day of natural gas, which will be used to generate 2500 MW of power for the plants.
The gas will be imported via a $342m, 140-mile pipeline that is currently being built and is due for completion in two months.
The deal is believed to be worth $3.7 billion a yearà‚ to Iran and was signed in Baghdad by Iraqi electricity minister Kareem al-Jumaili and Iranian oil minister Rostam Qasemi.
Iraq’s own gas fields are underdeveloped and the country currently cannot produce enough gas to power its gas plants.
The International Energy Agency last year predicted that Iraq will need cumulative energy investment of over $530 bn by 2022 ” more than $25 bn per year and a significant step up from the estimated $9bn it invested in its energy sector in 2011.
The IEA added that “catching up and keeping pace with rising demand for electricity is critical to Iraq’s national development”.
“Power stations in Iraq produce more electricity than ever before but prolonged power cuts are still being experienced on a daily basis in many parts of the country.” The IEA estimated that “Iraq needs 70 per cent more net power generation capacity to meet demand fully.”