Iran’s president welcomes long-term natural gas deal with Russia

Iran’s President Masoud Pezeshkian welcomed a long-term natural gas supply agreement with Russia’s Gazprom that will help the country turn into a regional gas hub, bne Intellinews reports, citing a statement during a visit by the prime Russian Minister Mihail Mishustin.

Gazprom and the National Iranian Gas Company signed a preliminary agreement in June to supply volumes of natural gas to Iran. In July, Iran’s Shana news agency disclosed the volumes in the deal, which were set at 300 million cubic meters per day or 109 billion cubic meters per year.

At the time, Iranian Oil Minister Javad Owji said the volumes would be provided for both domestic consumption and re-export to neighboring countries. The cost of building the pipeline to transport this gas will be covered by the Russian side, Owji also said in July, quoted by Interfax.

The contract between Gazprom and NIGC was “a masterpiece of energy diplomacy that could create the preconditions for an economic revolution and ensure energy security for the region with the help of Iran,” the Iranian official also said.

President Pezeshkian echoed that sentiment this week, saying, “We believe that if the important joint projects of Iran and Russia are implemented, they will create significant capabilities for both countries to offset the harsh sanctions.”

Iran has the world’s second largest natural gas reserves, after Russia, but has been constrained in its ability to develop them due to US sanctions that specifically target the energy industry. Gas imported from Russia will be sold to Turkey, Pakistan and Iraq.

A re-export deal is already in the works with Turkey’s state energy major Botas. The company said last week that it is in talks with the National Iranian Gas Company regarding long-term gas supply. The current agreement between the two, for an annual amount of 10 billion cubic meters of gas, is due to expire in two years.

By Charles Kennedy for Oilprice.com

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