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Official: Iran, Russia sign $6.5 billion in gas deals

An official says Iran has been moving in the direction for oil and gas interaction with Russia in order to protect national interests.

About $6.5 billion from a memorandum with Russian energy giant Gazprom has been converted into a firm contract, a senior Iranian official says.

“God willing, the rest of the memorandum worth $40 billion will be converted into contracts in the next month, and the negotiations are ongoing,” deputy foreign minister for economic diplomacy Mehdi Safari was quoted as saying Monday.

The National Iranian Oil Company (NIOC) and Gazprom signed the $40 billion memorandum in July on the day Russian President Vladimir Putin arrived in Tehran for a summit with his Iranian and Turkish counterparts.

Under the agreement, Gazprom will help NIOC in the development of the Kish and North Pars gas fields and also six oil fields. The Russian gas producer will also be involved in the completion of liquefied natural gas (LNG) projects and construction of gas export pipelines.

Iran sits on the world’s second-largest gas reserves after Russia.

Earlier this month, Iranian Minister of Petroleum Javad Owji visited Moscow where the two sides discussed the swap of Russian oil and oil products, with the figures to be agreed upon in the next few days, Safari said.

“The Russian gas swap contract is also being finalized,” he added.

The swap deal, in addition to economic benefits and reducing the cost of gas transit from Iran’s south to the country’s north to supply fuel to the northern provinces, will increase political solidarity between Iran and Russia and the intermediary countries such as Turkmenistan and Azerbaijan, Safari said.

“This is a very intelligent approach that leads to political and security stability and peace among nations.”

Safari said Iran's scenario for gas trade with Russia is to buy gas from the country and export its own gas to neighboring countries.

“We must also consider a situation that may lead us to swap gas or consume Russian gas inside power plants, but all our efforts are to re-export the gas purchased from Russia to the countries of the region,” he added.

Safari touched on the fact if Iran does not buy or swap Russian gas, the Russians will start such cooperation with other countries. “Hence, we must take advantage of the opportunities quickly,” he said.

Russian President Vladimir Putin proposed to his Turkish counterpart Tayyip Erdogan this month that Moscow could export more gas via Turkey and turn it into a new supply "hub".  Erdogan has said he had agreed with the proposal.

Russia is looking to redirect supplies away from the Nord Stream Baltic gas pipelines, damaged in explosions last month.

Safari said Iran’s ministry of petroleum has been moving in the “right direction” for oil and gas interaction with Russia in order to protect national interests

The focus of the Russian oil swap negotiations is to swap 10 million tonnes a year and the agreements are about to be finalized, he said.

Iran and Russia have also signed MoUs to export gas to Pakistan and Oman.

Tehran has completed work on its side of the pipeline up to the border of Pakistan and is ready to deliver the gas but Islamabad has yet to start construction of the line on its territory.  

The Islamic Republic has also agreed to revive a long-stalled project to lay an undersea pipeline to carry gas to Oman. The two countries signed a deal valued at $60 billion over 25 years in 2013 to supply gas to Oman.

Safari said the Russians are supposed to invest in the projects, stressing that Iran will not hand over the pipelines to any country.

According to the official, Russian companies will carry out the contract for building pipelines inside Pakistan in order to export gas from Iran.

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