Russia's Oil Projects in Iran May Reach $20 Billion

One day after the announcement of a contract for the daily export of Iranian oil to Russia in exchange for goods, the Russian Energy Minister announced that the value of exploration and development projects in Iran's oil fields by Russian companies is likely to reach $20 billion. Alexander Novak, the Russian Energy Minister, stated on Wednesday, February 23, in an interview with the news network "Russia 24" that the country estimates the value of potential oil and gas contracts with Iran to be around $20 billion. Russian companies have signed seven memorandums of understanding for the development of Iran's oil fields so far. This comes as Iran has signed a total of 19 memorandums with foreign companies in the oil and gas sector since the nuclear agreement in January last year. This means that more than one-third of the memorandums Iran has signed so far have been with Russian companies. However, none of these memorandums have yet turned into contracts. Bijan Namdar Zangeneh, Iran's Oil Minister, said on Tuesday after meeting with Novak that "within the next two weeks, we will sign an agreement to export 100,000 barrels of crude oil daily to (Lukoil) Russia." He mentioned that "50% of the value of the mentioned export shipments will be paid in cash to Iran at specified times, and the remainder will be used to finance the import of Russian goods needed by Iran." The value of the daily export of 100,000 barrels of oil to Russia, considering current oil prices of about $56, amounts to $2 billion annually. Iran had previously announced in 2015 that it wanted to sell or swap 500,000 barrels of oil to Russia, but no agreement was reached on the details of this deal. In another part of his interview with the Russian news network, Novak responded to a question about gas swapping with Iran, stating that "this topic was not discussed during his visit to Tehran." The official Russian news agency "Sputnik" reports that Novak had previously said last August that Moscow and Tehran want to complete the gas liquefaction project in southern Iran, allowing Russia to deliver its gas to northern Iran via Azerbaijan and receive and export an equivalent amount of liquefied gas from Iran in the Persian Gulf. His reference appears to be to the "Iran LNG" liquefied gas project with an annual liquefaction capacity of 14 billion cubic meters (equivalent to 10.5 million tons) of gas, which was limitedly carried out during Mahmoud Ahmadinejad's presidency with an expenditure of $2.5 billion, but the German company "Linde," which was Iran's contracting party, withdrew after sanctions, and the project has remained abandoned since then. Novak's statements last August came two months after Iran and Turkmenistan reached an agreement to carry out gas swapping, whereby Iran would take gas from Turkmenistan and deliver an equivalent amount to Azerbaijan.