Natural Gas Deal Between Iraq And Iran Not A Problem For U.S., Expert Says

The announcement on Tuesday of a natural gas deal between Iraq and Iran, with the latter selling gas to the former at international market prices Tuesday, may have stoked fears of an alliance between Iraq and an Islamist regime hostile to America. But it is “not a big deal,” according to a U.S. energy expert.

“Washington is relatively powerless to intervene,” said Simon Henderson, director of the Gulf and Energy Policy Program at the Washington Institute for Near East Policy in Washington, D.C. “The U.S. is more concerned about Iranian overflights of Iraq with arms supplies for Syria.”

The four-year deal stipulates that Iraq will buy 850 million cubic feet of gas a day at international market prices, Musab al-Mudaris, a spokesman for the Iraqi Electricity Ministry, said.

The gas fields are not fully developed because of sanctions, therefore Iran will be able to sell a minimal amount of gas to Iraq, Henderson said, adding that the gas deposits are not huge.

The announcement comes after Iran's outgoing president, Mahmoud Ahmadinejad, had high-level meetings with Iraqi officials in Baghdad last week. Iranian state-controlled Press TV reported on Friday that Tehran and Baghdad agreed to explore and develop crude oil and natural gas fields along their common border -- the border where they fought a long, devastating war from 1980 to 1988.

“For many years this created problems for the exploitation of these fields. Now it doesn’t,” Henderson said, referring to the new deal between the two countries.

Natural gas recently sold for $3.74 per million Btus.