Iran will sign a $4bn energy agreement with Russian companies, Iranian Oil Minister Mohsen Paknejad has announced, as the two nations seek to bolster ties while trying to cope with punishing Western economic sanctions.

Speaking on state TV earlier on Friday, Paknejad said the deal aims to develop seven Iranian oilfields in cooperation with Russian firms.

Recommended Stories

list of 3 itemsend of list

From military cooperation to energy, banking and agriculture, Tehran and Moscow have been engaged in deeper ties since the start of the military conflict in Ukraine, signing a strategic partnership treaty in January.

Friday’s deal is seen as another step in their bid to remove barriers in all spheres of their cooperation.

The deal also comes as Iran seeks to build momentum for nuclear negotiations with the United States that resume in Oman on Saturday, following consultations with its allies in Moscow and Beijing earlier this week.

OPEC

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

Advertisement

The meeting took place as several members of OPEC+, the group comprising OPEC and its allies led by Russia, suggested that the group increase oil output in June for a second consecutive month.

The proposed increase underscores a worsening dispute between members over compliance with production quotas.

It also follows calls from US President Donald Trump for OPEC to lower oil prices and his return to a policy of “maximum pressure” on Iran, whose oil exports Washington wants to reduce to zero.

On Friday, the two countries also announced that Moscow may supply 1.8 billion cubic metres (bcm) of natural gas to Tehran this year at a price which has yet to be agreed.

Paknejad said the deal had not been finalised but the countries were working to clinch an agreement as soon as possible, with the Russian firm Gazprom implementing it.

The two countries have long discussed setting up such a hub in Iran, with the possible participation of Qatar and Turkmenistan.

Long history

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

In January, Russian President Vladimir Putin, at a meeting in the Kremlin with his Iranian counterpart Masoud Pezeshkian, said Russia may eventually supply up to 55 billion cubic metres (bcm) of natural 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 following the war in Ukraine, and have not delivered any gas since then.

Advertisement

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.