Moscow Inks Major Gas Deal with Tehran, Bolstering Strategic Ties
Russia and Iran finalize agreement for 55 billion cubic meters of gas supplies, alongside funding for nuclear power plant development.
In an ambitious move to strengthen their strategic alliance, Moscow and Tehran have crossed swords on a monumental 55 billion cubic meters of Russian gas per year. However, the nail-biting negotiations over the prices are still ongoing. Additionally, Russia pledged to finance the construction of a state-of-the-art nuclear power plant in Iran, marking a significant escalation in their joint ventures.
This development comes at a time when the United States is keen on isolating Iran unless they agree to a comprehensive inspection of their nuclear facilities. Russia has been strengthening its bonds with Iran since the escalation of the military conflict in Ukraine, signing a strategic alliance treaty with Tehran in January. Both countries face crippling Western sanctions, and Moscow's oil and gas exports to Europe have nosedived.
Russia and Iran have a lengthy history of joint ventures, with Moscow playing a pivotal role in constructing a nuclear reactor at Bushehr, Iran's first. During Iranian Oil Minister Mohsen Paknejad's visit to Moscow earlier this week, both nations agreed on a 55 billion cubic meter gas transfer agreement. Notably, Moscow will fund the construction of a new nuclear power plant in Iran utilizing its credit line.
Donald Trump has expressed openness to meeting with Iran's leaders during his conversation with Time Magazine. Despite holding the world's second-largest gas reserves after Russia, Iran still imports gas, including from Turkmenistan, due to inadequate investment caused, in part, by U.S. sanctions.
Russian Energy Minister Sergei Tsivilev revealed that Russia may supply an astounding 1.8 billion cubic meters of natural gas to Iran in 2025, pending the finalization of the price negotiations. Previously, Russian President Vladimir Putin suggested that Russia may potentially supply up to 55 billion cubic meters of gas per year to Iran, though initial deliveries would be limited to 2 billion cubic meters.
Notably, a figure of 55 billion cubic meters would mirror the throughput of the Nord Stream 1 undersea pipelines to Europe that were mysteriously sabotaged in 2022 and have been non-operational since.
Paknejad announced on state TV on Friday that Iran will ink a $4 billion agreement with Russian companies to develop seven Iranian oil fields. The exact details of the agreement were not revealed, but Paknejad and the Russian minister signed a final document of bilateral agreements after a meeting of a Russo-Iranian economic cooperation commission.
Last June, Gazprom and the National Iranian Gas Company signed a memorandum to supply Russian pipeline gas to Iran. The potential routes for the pipeline have yet to be disclosed. Paknejad confirmed that Iran would proceed with the agreements with Gazprom, including the development of a regional hub for gas distribution. The two countries have been discussing the possibility of setting up such a hub in Iran, with the possible participation of Qatar and Turkmenistan.
Paknejad and Russian Deputy Prime Minister Alexander Novak discussed various aspects of the global oil market, including the impact of trade wars and the instability they create. Additionally, they touched upon the role that OPEC and its allies led by Russia, collectively known as OPEC+, would play in ensuring market stability. Paknejad went on record to say that OPEC+ would make decisions to maintain market equilibrium, though he refrained from elaborating on specific strategies.
OPEC+ may consider accelerating oil output hikes for a consecutive month in June, according to sources close to the discussions. The decision-making council will convene in early May to determine their policy direction.
Trump has advocated for OPEC to lower oil prices as part of his 'maximum pressure' strategy on Iran, aiming to bring down Iran's oil exports.
- The Russian Energy Minister, Sergei Tsivilev, has indicated that Russia may supply 1.8 billion cubic meters of natural gas to Iran in 2025, assuming the price negotiations are finalized.
- During Iranian Oil Minister Mohsen Paknejad's visit to Moscow, both nations agreed on a gas transfer agreement worth 55 billion cubic meters per year, with Russia pledging to fund the construction of a new nuclear power plant in Iran.
- The development comes after a strategic alliance treaty was signed between Russia and Iran in January, following the escalation of the military conflict in Ukraine.
- Iranian Oil Minister Mohsen Paknejad announced on state TV that Iran will ink a $4 billion agreement with Russian companies to develop seven Iranian oil fields, though the exact details were not disclosed.
- Paknejad and Russian Deputy Prime Minister Alexander Novak discussed potential roles that OPEC+, led by Russia, might play in ensuring market stability, including the possibility of accelerating oil output hikes for a consecutive month in June.
