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Iran, Russia Sign Trade, Oil, Technology Deals

By Nigar Bayramli May 19, 2023

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Iran Oil Minister Javad Owji and Russian Deputy Prime Minister Alexander Novak signed a statement of cooperation in a ceremony in Tehran, on May 17, 2023. / Shana.ir

Iran's Deputy Oil Minister Ahmad Asadzadeh has said 100 Iranian and 80 Russian companies signed two agreements and eight memorandums of understanding during their negotiations in Tehran.

The MoUs covered a wide range of fields, including projects to increase oil production, smart technology transfers, the production of compressors and the creation of a joint market, the Iranian Labour News Agency reported on May 17.

According to Asadzadeh, one of the agreements is about the production of steel wire ropes.

The negotiations were coordinated by the Iranian Oil Ministry, the Moscow State Institute of International Relations and its affiliate International Institute of Energy Policy and Diplomacy.

Representatives of dozens of Russian companies are in Iran to visit the 27th Iran's International Oil, Gas, Refining and Petrochemical Exhibition which started on May 17.

Deputy Prime Minister Alexander Novak who is in Iran, leading a Russian delegation to discuss boosting bilateral trade, said in a meeting with Iranian Oil Minister Javad Owji on May 17 that energy projects have been a topic of discussion during his trip to Tehran, and the two countries are in talks about establishing an electronic gas trading platform in southern Iran.

"Discussions are underway to establish such electronic trading platform in southern Iran, including the use of Iranian gas, which will be produced and developed in collaboration with our Russian companies. This is not a quick process, we need to develop gas sources, attract partners, and other suppliers," he said.

In turn, Owji referred to Iran’s contracts with Russian companies in the oil and gas industry in the last two years, saying that "our Russian partners are already developing some deposits. We now have ten more fields where we have opted to collaborate with our Russian partners and we talked about how we could work together with these fields".

"With such a large company as Gazprom, we have a memorandum of understanding worth $40 billion. Some of these agreements are already turning into real contracts. The negotiations for these projects are still continuing," Owji said.

Novak said earlier that Russia and Iran continue to discuss cooperation on six oil and two gas fields. In particular, Gazprom is considering joint development of the Kish and North Pars fields with Iran, followed by a project for liquefying gas and supplying it to world markets.

In a separate report, the Russian minister referred to the Bushehr nuclear power plant’s (NPP) debt to the Russian State Atomic Energy Corporation “Rosatom”, which is around 500 million euros. Rosatom is engaged in the construction of the second stage of the Bushehr NPP in Iran (the second energy unit to be built by 2024 and the third energy unit in 2026) with a total capacity of 2,100 MW.

Novak said that a new mechanism for financing the project using various currencies, budgetary or commercial lending, is now being considered. "The project did not stop, its implementation continues," he added.

Iran and Russia, both hit by the West's sanctions, have also accelerated their efforts to link their banking systems in recent years. The second largest bank in Russia, VTB Bank, has opened an office in Iran.

Alireza Peymanpak, the deputy industry minister and the head of the Iran Trade Promotion Organisation, said on May 17 that "this is the first Russian bank that will have a direct presence in Iran. This bank will help in transferring a part of foreign exchange earnings from our 'Trust Network' to the banking system and enhancing transparency in commerce".

Russia and Iran conduct about 80% of mutual settlements in national currencies - rubles and rials, and consider the possibility of making settlements in yuan, Novak told reporters during his trip to Tehran, and added that the share of the euro and the dollar is less than 20%.

Iran cannot normally transfer its money abroad through the Belgium-based SWIFT (Society for Worldwide Interbank Financial Telecommunication) system because of the imposition of sanctions on Iranian banks. Iran has established a network of private foreign exchange offices outside the country to collect and transfer its foreign exchange earnings.