Iranian Minister of Energy Ali Akbar Mehrabian said the Islamic Republic has signed a long-term strategic electricity contract with Iraq to provide its Arab neighbor with sustainable energy supplies.

Iran is already a key energy provider to Iraq which faces chronic electricity shortages despite sitting on the world’s fourth largest oil reserves.

“Given that we are facing a surplus of electricity production in the country at many times of the year, we pursue the development of energy diplomacy centered on electricity with neighbors in order to both solve their problems and create a stable flow of income and use the maximum capacity of our electricity network,” Iranian media on Wednesday quoted Mehrabian as saying.

The minister mentioned Iran's self-sufficiency in technical knowledge of power plant construction, stating that 1,950 megawatts of power plants have been built by Iranian companies with Iraqi investment.

He added that knowledge-based companies from Iran's private sector are also building 1,700 megawatts of power plants in Iraq.

The signing of long-term strategic contracts in the electricity sector has been one of the focal points of the Iranian government's "dynamic regional diplomacy that has yielded brilliant results for the country," according to the minister.

“In this regard, we prepared the ground for the first long-term cooperation in the electricity sector with Iraq, and signed an important and strategic contract with the country,” he added.

Mehrabian cited international reports, saying that the largest electricity production and distribution capacity among the West Asian countries belongs to Iran.

“Despite the slowdown in the development of the electricity industry in the past years, “Iran is still considered the most powerful electricity country in the region, whose record-breaking increase in power plant capacity this year will continue,” he said.

“Iran's power in the field of electricity is not merely limited to the installed capacity of power plants. Due to the expansion of local knowledge, we are not only one of the few self-sufficient countries in the world in the fields of construction, upgrading, repairs and maintenance of power plant units, but we have significant exports of various types of engineering services in the field of electricity.”

The agreement comes amid unilateral US sanctions reimpose on Iran since 2018, which forbid countries from purchasing Iranian energy.

Iraq relies on Iran for natural gas that generates as much as 45 percent of its 14,000 megawatts of electricity consumed daily. Iran transmits another 1,000 megawatts directly, making itself an indispensable energy source for its Arab neighbor.

The US has had to repeatedly extend sanctions exemption by 45, 90 or 120 days, to allow Baghdad to import Iranian energy, but it is unhappy with close relationship and trade between Baghdad and Tehran.