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US Grants Iraq New 60-Day Waiver to Import Iranian Gas

FILE - Natural gas refineries are seen at the South Pars gas field on the northern coast of the Persian Gulf, in Asaluyeh, Iran, March 16, 2019.

The U.S. has granted Iraq a 60-day extension to a sanctions waiver allowing it to import Iranian gas for its crippled power grids, an Iraqi official told AFP on Wednesday.

Baghdad relies on gas and electricity imports from its neighbor Tehran to supply about a third of its electricity sector, worn down by years of conflict and poor maintenance.

The U.S. blacklisted Iran's energy industry in late 2018 but has since granted its ally Baghdad a series of temporary waivers to stave off countrywide blackouts.

In May, Washington granted Iraq a four-month extension as a gesture of goodwill toward Mustafa al-Kadhimi, who had just formed a cabinet seen as more U.S.-friendly than its predecessor.

The U.S. has pressured Iraq to use the waivers to become independent from Iranian energy, specifically by partnering with American firms, and had been frustrated by the slow progress under the previous premier, Adel Abdul-Mahdi.

While Kadhimi's Cabinet has sought to fast-track such deals, it has been unable stem the near-daily rocket and IED attacks on Western military and diplomatic interests.

On his trip to Washington in August, Kadhimi scored agreements with various U.S. firms for energy development across Iraq, including Chevron, Baker Hughes, Exxon and General Electric.

As OPEC's second-biggest producer, Iraq relies on crude exports to fund more than 90 percent of its state budget, but this year's price collapse has seriously undermined the government's fiscal position.

In a further blow, coronavirus has spread across the country, with more than 330,000 confirmed cases and 8,700 deaths announced by the health ministry.