Russia and Iran on Friday signed a major treaty for a comprehensive strategic partnership and are close to finalizing a 2 billion cubic meter per year deal to send Russian gas to Iran, potentially growing to 55 Bcm/yr.
The two oil- and gas-rich countries seek closer ties amid growing tensions with the West and the risk of a tougher energy sanctions policy from the incoming Trump administration in the US.
Under the strategic partnership agreement signed during a meeting between Russian leader Vladimir Putin and his Iranian counterpart Masoud Pezeshkian in Moscow, the two countries agreed to “strive for deeper and expanded ties in all areas of mutual interest, the strengthening of cooperation in the field of security and defense, [and] close coordination of actions on regional and global levels.”
Russia in June 2024 signed a similar comprehensive strategic partnership agreement with North Korea that included military cooperation as Russia continues its war against Ukraine.
The treaty with Iran is aimed to spur economic ties and accelerate joint projects, Putin said. The two countries see “big prospects” in the development of a north-south transportation corridor and seek to strengthen ties in terms of bilateral trade, finance and investment, according to Putin.
Russia and Iran also seek to synchronize their payment systems and rely on settlements in national currencies, which in 2024, already accounted for more than 95% of all trade transactions between the two countries, Putin said.
“We continue our large projects, including those in nuclear energy. There are also other emerging projects in the energy sector and good prospects in logistics,” Putin said.
“We have plans for the construction of a railroad [as part of the] North-South corridor. We have plans for domestic production of gas turbines in Russia. We have very good potential areas [of cooperation], including in oil refining. We have an interesting project on electricity supply [among] Azerbaijan, Iran and Russia, so we can ensure mutual flows in the interest of all countries,” Russian Energy Minister Sergei Tsivilev told reporters on the sidelines of the meeting.
Gas Supplies
Russia will supply up to 2 Bcm/yr of pipeline gas to Iran and might increase the volumes to 55 Bcm/yr, Putin told a briefing after the meeting with Pezeshkian.
The route of the proposed pipeline from Russia to Iran via Azerbaijan has been agreed, Tsivilev said, adding that negotiations are in a final stage, pending an agreement on price.
There is a preliminary agreement to increase the supply volume to 55 Bcm/yr, he said. But first, the sides will test all the technology issues on modest supply volumes, he added, without providing the timelines.
The negotiated gas supply deal with Iran is in line with Gazprom’s strategy to redirect gas exports to the East, following a loss of most markets in Europe amid the war in Ukraine.
For Tehran, the deal might be an additional source of gas as it faces shortage during seasonal demand spikes, due to runaway domestic consumption growth, despite rich upstream resources and regional gas hub ambitions.
The deal will follow a strategic memorandum on pipeline supplies signed by Russia’s Gazprom and National Iranian Gas Co. in June 2024.
In July 2022, Gazprom signed another memorandum of understanding with the National Iranian Oil Co. that covered $40 billion worth of potential projects, including the development of Iranian oil and gas fields, natural gas and petroleum product swaps, LNG projects, construction of natural gas export pipelines and the exchange of technology.