Iraq signs deal with Iran to import gas for power

BAGHDAD May 22 (Reuters) - Iraq's electricity ministry said on Sunday it has signed an initial agreement with Iran to import natural gas for power generation.

Under the memorandum of understanding between the two neighbours, Iran will install a pipeline through Iraq and supply it with gas that would be used to feed two power plants in Baghdad, the electricity ministry said.

Iraq will buy 25 million cubic metres of gas each day from Iran under the five-year deal, according to international prices, which would generate 2,500 megawatts.

The gas pipeline will pass through Iraq's Mansuriyah gas field near the Iranian border in volatile Diyala province. The gas would supply a power plant in Sadr City in northern Baghdad, and another plant in the northern outskirts of Baghdad. The pipeline will be completed in 18 months.

The MOU still needs the approval of the Iraqi cabinet and parliament.

Iraq has struggled for years with power blackouts and risks years more of electricity shortages. Eight years after the U.S.-led invasion that toppled Saddam Hussein, Iraqis receive only a few hours of power a day from the national grid and the shortage has been a key complaint at recent nationwide protests.

The OPEC member signed an initial contract with South Korean group KOGAS, Kuwait Energy Company, and Turkey's state-owned TPAO last year to develop the Mansuriyah natural gas field.

Iran and Iraq fought an eight-year war in the 1980s in which hundreds of thousands were killed. Ties have improved since Saddam was ousted by the U.S. invasion and a Shi'ite-led government came to power in Iraq. (Reporting by Aseel Kami; Editing by Rania El Gamal and Dan Lalor)