Saudi Arabia and Iraq have signed a deal for connecting their electricity grids, which can help Iraq with its electricity woes and reduce energy dependence on Iran.

The document was inked between Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud and Iraqi Oil Minister Ihsan Abdul Jabbar on Friday, July 15, ahead of Saturday's Jeddah summit of leaders of the Persian Gulf Cooperation Council member states, and leaders from Jordan, Egypt and Iraq and the United States.

Signed between Saudi Electricity Company and the Iraqi Ministry of Electricity, the electrical interconnection will link Arar in northern Saudi Arabia to Yusufiya near Baghdad and have a capacity of 1,000 megawatts and a voltage of 400 kilovolts, with a length of 435 kilometers.

The project constitutes a step to establish a regional market for electricity trade as the Persian Gulf Interconnection Authority also signed a contract to connect its network to the electricity grid of southern Iraq. This contract includes construction of lines from the authority’s substation in Kuwait to the al-Faw station in southern Iraq to supply it with about 500 megawatts of energy from the Persian Gulf countries. Construction work will take about 24 months with a total transmission capacity of 1,800 megawatts.

Iraq has been working with Saudi Arabia on electricity sharing since at least 2020, and in January, they signed a memorandum of understanding on connecting their power grids, prompted by Iran cutting its electricity and gas exports to Iraq.

Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet energy needs, especially from neighboring Iran, which currently provides a third of Iraq's gas and electricity needs.