Germany is in talks with Iraq about importing natural gas, Chancellor Olaf Scholz said on Friday, as Berlin steps up efforts to diversify energy sources away from Russia, following its invasion of Ukraine.

“We also talked about possible gas deliveries to Germany and agreed to stay in close contact,” Scholz said in a joint news conference with Iraqi Prime Minister Mohammed Shia al-Sudani in Berlin.

The Iraqi leader said his country had offered opportunities to German companies to invest in Iraq’s natural gas and gas generated as a byproduct of oil production.

Despite holding the world’s 12th-largest proven gas reserves, Iraq depends on Iran for about 40 percent of its power supplies, mainly gas imports. Iraq flares most of the gas that it could capture extracting oil because it lacks the facilities to process it into fuel or export it.

Iraq’s semi-autonomous Kurdistan Regional Government (KRG) has been working to extend a gas pipeline network toward the border with Turkey, as it looks to develop future exports. However, tensions between the Kurdish region’s two ruling families, the Kurdistan Democratic Party’s Barzani family and the Patriotic Union of Kurdistan (PUK), led by the Talabani clan, have stymied progress.

Iraq, the second-largest crude producer within Opec, has largely flown under the radar as European countries seek alternative suppliers to Russian energy in the Middle East.

Germany has held talks with the US and UAE about boosting gas imports. In November, Berlin signed a 15-year LNG import deal with Qatar.

Sudani came to power after Iraq was gripped by turmoil last year, which lead to clashes between competing Shia political camps. A former labor and social affairs minister, he was nominated for the prime ministerial spot by Shia parties backed mainly by Iran.

Also on Friday, German company Siemens Energy signed a deal with Iraq to upgrade its power grid. Some analysts have questioned whether Iran, which has large sway over Iraq, has sought to prevent the country from monetising its own gas resources. Iraq suffers from frequent blackouts.

“We are striving for a better use of flared gas, and correspondingly we can use gas much better and more efficiently,” Sudani said.

“We offered during today’s visit that German companies can invest in these areas and be present in Iraq.”

Source: Middle East Eye