(Reuters) — After the U.S. moved to block Iraq's imports of electricity from Iran, Baghdad is looking to Qatar and Oman as possible options should Washington do the same regarding their trade in gas, the boss of Iraq's South Gas Company said on Monday.

U.S. President Donald Trump's administration on Saturday rescinded a sanctions waiver that since 2018 has allowed Iraq to pay Iran for electricity as it presses on with its "maximum pressure" campaign against Tehran, a State Department spokesperson said.

But their far larger cross-border trade is in gas.

Baghdad currently receives up to 50 million cubic meters of gas per day from Iran depending on its needs under a five-year deal extension signed in March 2024.

Iraq pays $4-5 billion per year to Iran for gas imports, according to Iraqi energy officials.

Iraq's electricity minister said the potential loss of gas imports from Iran would reduce Iraq's daily electricity output of 27,000 megawatts by a third. To mitigate the impact of a potential loss of Iranian gas imports, Iraq will lease a floating liquefied natural gas (LNG) terminal, Hamza Abdul Baqi, head of the state-owned SGC, told Reuters.

"This measure was taken due to the (potential) cut-off of Iranian gas. The government has tasked the Ministry of Oil with finding alternatives," Abdul Baqi said.

A deal for the LNG terminal will be signed with UAE-based Breeze Investment (BI) at the end of March, he said, adding he expected it to be operational by mid-year to handle gas from Qatar and Oman.

He said the terminal would be based at the port of Khor al-Zubair on the Gulf and the gas piped via a 45-kilometre (28-mile) pipeline already under construction to a supply point near the southern city of Basra, where Iraq drills much of its oil.

It will be able to supply at least 500 million cubic feet (14 million cubic metres) of gas per day, he added, or about a third of Iran's current supply.