Iran will resume normal gas flows to Iraq on Wednesday after reaching an agreement with Iraq on Tuesday over unpaid bills, a spokesman for Iraq's electricity ministry said.
Iran's state gas company said on Monday it had slashed supplies to neighbouring Iraq over arrears of more than $6 billion. The Iraqi electricity ministry said the cuts placed Baghdad and other cities at risk of serious power shortages.
An agreement was reached during a meeting between Iranian Energy Minister Reza Ardakanian, who is visiting Baghdad, and Iraqi counterpart Majid Mahdi to resume normal gas flow rates as of Wednesday evening, spokesman Ahmed Moussa told Reuters.
"Meeting ended with resolving lingering issues and gas flow would be resumed to reach normal rates gradually," he said.
Iran's electricity minister also met with Prime Minister Mustafa al-Kadhimi and conveyed the Iranian government's pledge to "urgently resume gas pumping which had been slashed recently after technical problems", a statement from the prime minister's office cited Iran's minister as saying without giving details.
It was not clear if a specific deal over arrears had been concluded with Tehran to pay the delayed bills.
But a senior member of the Iran-Iraq chamber of commerce said Tehran had accepted a barter deal and would receive goods as part of the arrears.
"Iran has bought goods for part of Iraq's debt…, which will arrive in the country in the next few days," Hamid Hoseini told the official Iranian news agency IRNA.
Iraq said on Dec. 21 it was ready to export 700,000 tonnes of barley to Iran at a price of $125 per tonne as part of payments owed by the Iraqi government to Iran.
An Iraqi trade ministry official said on Tuesday the barley export shipments to Iran, in addition to other goods will be used to pay back part of the delayed gas debts.
Iran has been unable to access billions of dollars in assets in several countries due to US sanctions.
The United States has insisted that oil-rich Iraq, OPEC's second-largest producer, moves towards self-sufficiency as a condition for its exemption to import Iranian energy, yet Baghdad has struggled to do so, in part due to low oil prices.