U.S. discusses Iran sanctions with Iraq, Baghdad hurt by curbs on Iranian gas imports

By John Davison

BAGHDAD (Reuters) - U.S. Energy Secretary Rick Perry said on Tuesday he discussed sanctions against Iran with Iraqi energy officials as Washington pressures Baghdad to stop importing Iranian gas that is crucial for its power grid.

"Sanctions were mentioned, they're a reality, they're there," Perry told reporters in Baghdad after meeting Iraq's oil and electricity ministers, without providing further details of the discussion.

Washington gave Iraq a 45-day waiver over imports of Iranian gas when it reimposed sanctions on Iran's oil sector on Nov. 5. Iraqi officials have said they need around two years to wean themselves off Iranian gas imports and find an alternative source.

"This (Iraqi) administration recognises ... the imperative to move with some expedition to send a message to the United States ... that this is an administration that is going to move with speed to develop infrastructure especially in the energy sector that best serves the citizens of Iraq," Perry said.

Iraq reached a deal with U.S. energy giant General Electric and German rival Siemens to install liquefied natural gas-operated mobile power units at some small southern oil fields, Iraq's state newspaper reported last month.

The Financial Times reported in October that the U.S. government had intervened in favour of GE for a contract sought by both companies to supply 11 gigawatts of power generation equipment, reportedly worth around $15 billion.

Perry spoke at a conference organised by the U.S. Chamber of Commerce which Oil Minister Thamer Ghadhban also attended. "The most important (thing) is our presence and our conversations ... we talked about the challenges but we also talked about some very positive opportunities," Perry said.

Neither minister gave details of the conversations.

Washington is seeking to roll back Iranian influence in the Middle East, including Iraq where Tehran has dominated politics and trade.

Iraq's efforts to reduce gas flaring could reduce its reliance on Iranian gas.

The U.S. sanctions target Iranian oil as well as its banking and transport industry.

Perry said the United States recognised the challenges faced by Iraq's government in rebuilding oil infrastructure destroyed during the war against Islamic State militants.

Perry later met Prime Minister Adel Abdul Mahdi and discussed energy and the economy, the premier's office said in a statement. It said Perry was in Baghdad with a delegation of over 50 business people.

(Reporting by John Davison; Writing by Ahmed Aboulenein; Editing by Richard Balmforth)