A general view of the Abadan oil refinery in southwest Iran, as seen from the Iraqi side of the Shatt al-Arab, Sept. 21, 2019. Photo: Reuters / Essam Al-Sudani.

Iran has signed a two-year contract with Iraq to export electricity to the neighboring country, Iranian state news agency IRNA on Thursday quoted the country’s Energy Minister Reza Ardakanian as saying.

The agreement comes amid sanctions reimposed on Iran since 2018 which forbid countries from purchasing Iranian energy. US President Donald Trump in 2018 exited Iran’s 2015 nuclear deal and reimposed the sanctions on Tehran that have battered its economy.

“We signed a contract with Iraq for exporting electricity in 2020 and 2021,” said Ardakanian, who travelled to Iraq on Wednesday.

“With coordination of the Iranian embassy in Iraq, half of the disbursement worth $400 million was received during the trip.”

US Secretary of State Mike Pompeo said in May that Washington will grant a 120-day sanctions waiver for Iraq to continue importing electricity from Iran to help the new Iraqi government succeed.

Washington has repeatedly extended the sanctions exemption for Baghdad to use crucial Iranian energy supplies for its power grid for periods of 90 or 120 days, but in April it granted an extension for only 30 days as Baghdad struggled to form a new government.

Ardakanian said Tehran and Baghdad have reviewed a three-year plan for reconstructing the Iraqi electricity industry by the Iranian private sector.

“Iranian technical and expert delegations will visit Iraq next week to sign two important contracts on reducing power grid losses and repairing electricity equipment,” Ardakanian said.