Russia: Possibility of Agreement with Iran for Oil-for-Goods Program

While Ali Akbar Velayati, advisor to the Supreme Leader of the Islamic Republic, quoted Vladimir Putin as saying that Russian companies are ready to invest up to $50 billion in Iran's oil and gas industries, the Kremlin spokesman denied these statements, and the Russian energy minister said that purchasing Iranian oil in exchange for Russian goods is possible. Ali Akbar Velayati, after his meeting with Vladimir Putin on Thursday, stated that Russian companies are prepared to invest in Iran, including in the oil and gas sectors, up to $50 billion. However, hours later, the news agency Itar-Tass reported that Dmitry Peskov, spokesman for the Russian presidency, said he could not confirm such a thing in response to reporters' questions. On the other hand, the Russian energy minister also announced the feasibility of implementing an "oil-for-goods" program between the two countries. According to Itar-Tass, Alexander Novak said on Friday, July 22, "We are interested in Iran taking advantage of the opportunity to purchase goods, labor, and services from Russia to expand trade and relations [between the two countries]." A day before these statements, Steve Mnuchin, the U.S. Treasury Secretary, had said that if Russia, China, and Europe continue to buy oil from Iran, they would be subject to U.S. sanctions. In response to Mr. Mnuchin's warning, the Russian energy minister stated that the "oil-for-goods" program does not mean direct purchases of oil from Iran and that "this purchase [of oil from Iran] is not by Russia and Russian companies." In 2014, when Iran was under UN sanctions and various countries, Iran and Russia implemented the "oil-for-goods" program for 100,000 barrels of oil per day. After the U.S. withdrawal from the JCPOA, Alexander Novak proposed that this program be established for another five years between the two countries. The U.S. officially withdrew from the JCPOA on May 8, and after that, a U.S. State Department official announced that the implementation of a new round of severe sanctions against Iran would begin on August 4, and the section related to Iran's energy and banking transactions would start on November 4. According to Brian Hook, the State Department's policy director, since May 8, more than 50 international companies, especially in the energy and financial sectors, have announced their intention to end their transactions with Iran. "Lukoil," Russia's second-largest oil company, was also one of these companies that announced about two months ago that it currently does not intend to pursue projects related to Iran due to fears of U.S. sanctions. The International Energy Agency announced on Thursday that Iran's oil exports to Europe halved last month compared to the previous month. However, Iranian officials are trying not to lose their oil buyers. According to Iranian media, Ali Akbar Velayati is set to travel to China after Russia in this regard.