Iran, Russia agree on 55 bcm of gas supplies, nuclear plant funding

Moscow and Tehran have reached a deal on 55 billion cubic metres (bcm) of Russian gas supplies a year, though prices are yet to be agreed, while Russia also pledged to fund construction of a new nuclear power plant in Iran, officials said on Friday.

The preliminary agreements came as the United States is looking to isolate Iran from the rest of the world unless Tehran agrees to a new deal for inspections of its nuclear facilities, Reuters reports.

Russia has deepened ties with Iran since the start of the military conflict in Ukraine and signed a strategic partnership treaty with Tehran in January. Both countries are under Western sanctions and Moscow’s oil and gas exports to Europe have drastically declined.

Russia has a long history of cooperation with Iran and helped build a nuclear reactor at Bushehr in the south of the country, Iran’s first.

Iranian Oil Minister, Mohsen Paknejad, has been on a visit this week in Moscow. On Friday he met Russian Energy Minister, Sergei Tsivilev, at an inter-governmental commission.

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Shana News Agency, citing Paknejad, said both countries agreed on a 55 bcm gas transfer agreement, while a new nuclear power plant in Iran would be constructed with financing from Moscow’s credit line.

Despite holding the world’s second-largest gas reserves after Russia, Iran imports gas, including from Turkmenistan, due to severe under-investment, caused in part by US sanctions.

Tsivilev, speaking alongside Paknejad, said that Russia may supply 1.8 billion bcm of natural gas to Iran this year, at a price yet to be agreed.

Russian President, Vladimir Putin,  at a meeting with his Iranian counterpart, Masoud Pezeshkian, in January in the Kremlin, already said Russia may eventually supply up to 55 billion cubic metres (bcm) of gas per year to Iran, though starting from lower volumes of up to 2 bcm.

A figure of 55 bcm would be similar to the throughput of the Nord Stream 1 undersea pipelines to Europe that were damaged by blasts in 2022 and have not delivered any gas since then.

Speaking on state TV earlier on Friday, Paknejad said Iran will sign a $4 billion agreement with Russian companies to develop seven Iranian oilfields.

He and the Russian Minister signed a final document of bilateral agreements after a meeting of a Russo-Iranian economic cooperation commission, but the details were not disclosed.

Russian gas giant, Gazprom, signed a Memorandum last June with the National Iranian Gas Company to supply Russian pipeline gas to Iran. Possible routes for the pipeline have not been disclosed.

Paknejad said Iran would implement the agreements with Gazprom, including on a regional hub for distribution of gas. The two countries have long discussed setting up such a hub in Iran, with the possible participation of Qatar and Turkmenistan.

OPEC+

On Thursday, Paknejad met Russian Deputy Prime Minister, Alexander Novak, Putin’s point man on relations with the Organisation of the Petroleum Exporting Countries (OPEC).

Paknejad said, on Friday, there were a lot of uncertainties on the global oil market, including over the impact of tariff wars. US President, Donald Trump, announced hefty tariffs on most other nations in April, shaking business and consumer confidence and leading to a rapid selloff of US assets.

Paknejad also said that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, a group known as OPEC+, would take decisions to ensure market stability. He did not elaborate on what these might entail.

Several members of OPEC+ have suggested the group should accelerate oil output hikes in June for a second consecutive month, three sources familiar with OPEC+ talks told Reuters. OPEC+ will gather in early May to decide on its policy.

Trump has called for OPEC to lower oil prices as he pursues a policy of “maximum pressure” on Iran, whose oil exports Washington wants to reduce to zero.

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