Washington reportedly refusing to apply sanctions waiver to Iraq-Turkmenistan-Iran gas supply deal

Washington has reportedly rejected Iraq’s request for a sanctions waiver that would allow it to import gas via pipeline under a swap arrangement involving Turkmenistan and Iran.

Iraq suffers from a chronic power deficit and it urgently needs more gas for gas-fired plants that generate electricity. With the Iraq-Turkmenistan-Iran arrangement blocked by sanctions, Baghdad must now advance alternative plans that it can deliver on to sufficiently feed its power grid. Many people in Iraq often find themselves dependent on costly private generators to keep the lights on.

Under a deal drawn up in 2023, Turkmenistan agreed to export gas to Iraq through Iran, which is situated between the two countries. A swap deal envisaged Iran receiving Turkmen gas and in turn piping the gas to Iraq. However, given the US sanctions on Tehran, Washington's approval would be needed to enable the operation of the scheme.

With US President Trump's administration tightening its "maximum pressure" campaign against Tehran—one consequence of this was seen last week as the US ended a sanctions exemption it put in place for the development of Iran’s sole oceanic port, Chabahar—no such permission has been forthcoming.

Reuters on September 19 said that in speaking to four Iraqi officials and reviewing seven official documents, it discovered how Baghdad sought US approval for months to let it import around 5.025bn cubic metres (bcm)/year of Turkmen gas via Iran.

Providing details of a draft contract to which it obtained access, Reuters said that under the terms Iran would receive no money, but would receive gas for its own needs. The gas volume for Iran would amount to no more than 23% of the daily volume coming from Turkmenistan. Baghdad, it added, was ready to permit a third-party international monitor to oversee deal compliance with US sanctions and anti-money laundering rules.

A US source familiar with the matter told the news agency that the Trump administration would not greenlight arrangements that could be to Iran’s advantage, even though it was working with Iraq on its energy needs.

One option Iraq is looking at is constructing infrastructure to import liquefied natural gas (LNG) shipped from Qatar.