DUBAI, UAE - Iraq signed a gas supply agreement with Turkmenistan on Saturday, marking a significant step in securing fuel for the country’s power generation plants.

The agreement, signed in Baghdad between Iraqi Electricity Minister Ziyad Ali Fadhil and Turkmenistan’s Minister of State for Gas Affairs Maksat Babayev, follows more than a year of intense technical negotiations and mutual visits. A memorandum of understanding was signed last year, paving the way for the deal.

Under the terms of the agreement, Turkmenistan will supply Iraq with 20 million cubic meters of gas per day.

Swiss company Loxstone Energy has been contracted to manage the transport of the Turkmen gas through Iran’s pipeline network via a swap mechanism.

Following the signing ceremony, Fadhil emphasized that the deal is part of the government's broader program to diversify energy sources and boost fuel supplies.

“This step will significantly contribute to ensuring our gas-fired power plants have the necessary fuel,” read a statement by the Iraqi ministry

Fadhil also noted that while gas imports are a temporary solution, Iraq is working on long-term projects aimed at achieving self-sufficiency in gas production. “We are committed to a comprehensive vision that balances short-term solutions with long-term strategies. The goal is to rely solely on our national resources in the coming years.”

Turkmenistan’s Babayev praised the agreement, describing it as a strategic partnership that aligns with his country’s commitment to supporting Iraq's energy sector.

“We are proud to be a trusted partner for Iraq in the energy field, and we look forward to strengthening economic cooperation between our nations,” Babayev said in a joint press statement.

The agreement comes after Iran signed a deal in July to facilitate the gas swap between Turkmenistan and Iraq, following intense negotiations. Iranian media reported that the arrangement would allow Turkmen gas to be transported through Iran and then supplied to Iraq.

Iraq has long relied on imports of electricity and gas from Iran, which account for between 30 to 40 percent of its energy needs. These imports are especially crucial during the summer months, when temperatures can reach 50°C and energy demand peaks. However, Iraq has faced difficulties paying for these imports due to US sanctions, which restrict payments to Iran to non-sanctioned goods such as food and medicine.