Sudani said Iran had cut gas exports to Iraq by more than 50% as of July 1 after Baghdad failed to secure U.S. approval to disburse owed funds, but Tehran had now agreed to resume gas exports in exchange for crude oil.
The deal was reached during talks with an Iranian delegation that was in Baghdad since Saturday, Sudani said in a televised speech.
Iraq imports electricity and gas from Iran that total between a third and 40% of its power supply, especially crucial in sweltering summer months when temperatures can top 50 Celsius (122 Fahrenheit) and power consumption peaks.
Iraq has had trouble paying for those imports. It owes Iran around 11 billion euros ($12.1 billion) in outstanding debts, Sudani said, and struggles to pay due to U.S. sanctions that only allow Iran to access funds to buy non-sanctioned goods, such as food and medicine.
Even those procedures are complicated, and "contribute to unwanted delays in making the payments, and subsequently the funds are not paid to the Iranians", Farhad Alaaldin, foreign affairs adviser to the prime minister, told Reuters.
By trading Iraqi crude for Iranian gas, Sudani said, Iraq would avoid rolling power cuts every summer while working to complete gas capture and extraction projects that would help make the country self-sufficient.
