Oil Price - Iraq has made a US$300-million payment to Iran under a power export agreement, according to Azeri news media Trend, quoting Iran’s Deputy Energy Minister Houshang Falahatian. Another US$800 million remain to be paid.

Iran was exporting some 1,500 MW of electricity to its neighbor as of November 2016, when Iraq defaulted on its payments. Plans were to increase exports to 2,000 MW. At the time, Falahatian said that Iraq owed Tehran money for over a year of power supplies, adding that ways of addressing the problem were being discussed.

While the discussions lasted, Iran cut off the power supply to its neighbor over the first two months of 2017, but in March started ramping up deliveries again. Official statistics from the Iranian Energy Ministry cited by Trend reveal that overall Iranian electricity exports fell to 300 million kWh over the last two months of the Iranian fiscal year, down 78 percent, while imports went up by 6 percent to 789 million kWh.

Meanwhile, the two countries are discussing the joint development of oil and gas fields along their border, settling their earlier differences, which back in the 1980s escalated into an open military conflict. Now the neighbors are back to cooperation, aware of the benefits they stand to reap if they work together.

However, this could change if Iran’s President Hassan Rouhani does not win a second term in today’s vote. Rouhani is a reformer who rose to power with a pledge to improve relations between iran and the West and whose Energy Minister, Bijan Zanganeh, came up with the new International Petroleum Contracts that should bring foreign oil and gas companies back to Iran, restarting its long-suffering energy industry.

Rouhani’s lead over conservative candidate Ebrahim Reisi, however, seems to be limited, so there is a possibility for a conservative win. This is bound to change the direction of Iran’s foreign policy with uncertain consequences.

By Irina Slav for Oilprice.com