HISTORIC $40 BILLION DEAL SIGNED BY IRAN AND RUSSIA FOR JOINT INVESTMENT IN ENERGY PROJECTS
By: Abdulbari Adam, Esq
Russia recently signed a historic $40 billion deal with Iran on energy projects. The deal was consummated during Russian President Vladimir Putin’s visit to Iran. The agreement will cover development projects at several Iranian oil and gas fields, including a $10 billion project in the Persian Gulf’s Kish and North Pars gas fields, as well as a $15 billion project to boost pressure at South Pars, the world’s largest gas field located on Iran’s maritime border with Qatar. National Iranian Oil Company (NIOC) and Gazprom will also collaborate on the completion of Liquefied Natural Gas (LNG) projects, the construction of gas export pipelines, and swap deals between Iran and Russia involving natural gas and petroleum products, according to the statement by Shana.
In a bid to recover from the US 2018 reinstation of sanctions that chocked off Iran’s international interest, the country entered this agreement to attract foreign investment to its forlorn oil and gas sector. Russia on the other hand, faced with Western sanctions for invasion of Ukraine, also needs to disparate its energy resources markets off the West, this makes it a welcome agreement for both countries.
Russia also views Iran as an important part of the proposed North-South transport corridor a 7,200-kilometer network of ship, rail, and road routes that would allow freight to be moved from St. Petersburg to India.
The deal will serve as a continued development to further strengthen the already existing relationship between the two countries, both of which consider themselves important and independent regional and international players. It is therefore well grounded that the two parties’ interests are spread across several key areas, including the development of energy resources and export routes, the territorial division over the Caspian Sea as well as general regional interests. The knottiness of the Russia – Iran relationship is reflected in the fact that they have a mutual interest in counterbalancing America’s influence and the west at large. Only time will reveal the effect of this deal on the global oil market.
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