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Russia ready to invest $50 billion in Iran's oil and gas, Iranian official says: report

  • Author
  • Nadia Rodova
  • Editor
  • Bob Matyi
  • Commodity
  • Oil

Moscow — Russia's is ready to invest up to $50 billion in Iran's oil and gas sector, a senior adviser to Iran's Supreme Leader Ayatollah Ali Khamenei said Thursday following a meeting with Russia's President Vladimir Putin outside of Moscow, according to reports by Iranian media.

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Oil cooperation between Iran and Russia can be boosted to some $50 billion and Moscow has expressed readiness to make this investment, the adviser on international affairs, Ali Akbar Velayati, told Iran's state TV, as reported by Mehr news agency.

The sum is significant and Russia can replace Western companies, which have to leave Iran due to the US sanctions, he said, according to the report.

The meeting, which Velayati said was "very constructive", took place as looming US sanctions against Iran are expected to hit the country's oil sector heavily, causing supply shortages on the oil markets in the fourth quarter. US officials are pushing for oil consumers to reduce their purchases of Iranian crude "down to zero," Brian Hook, US director of policy planning and chief negotiator on Iran nuclear deal talks, said Wednesday.

Velayati said a major Russian company has signed a $4 billion oil deal with Iran, which will become operational "in the near future." Two other major Russian oil companies, Rosneft and Gazprom Neft, also started talks with the Iranian oil ministry, which could increase their contracts with the country to $10 billion, he added without elaborating, as reported by Irib news agency.

During the meeting, the two discussed the bilateral ties as well as the situation in Syria, and Velayati gave Putin two messages from Khamenei and Iran's president Hassan Rouhani, the Kremlin's press office said, providing no further details.

A long-time political ally of Iran, Russian companies have looked to capitalize in recent years on the strong relationship to secure new oil and gas cooperation deals.

Six Russian companies are in talks on upstream cooperation with National Iranian Oil Co: Gazprom, Gazprom Neft, Lukoil, Rosneft, Tatneft and Zarubezhneft.

In March, Iran signed its first oil field development deal under its new upstream contract model with a consortium led by Russia's Zarubezhneft to develop two fields, and indicated more deals with Russia are likely. The $750 million deal between Zarubezhneft and Iran's privately owned Dana Energy aims to raise production at the Aban and West Paydar fields, which now produce a combined 36,000 b/d. OMV's bid for the contract was rejected.

In December 2017 NIOC signed an agreement with Gazprom outlining a new "road map for gas cooperation" in areas including production, transportation and processing of hydrocarbons, including gas-to-chemicals. The two also signed an agreement for Iran's long overdue LNG projects, with Gazprom to study it for six months, before delivering a proposal to NIOC, the companies said at the time.

In November, NIOC signed an agreement with Russia's top oil producer Rosneft, setting out key terms of strategic cooperation on oil and gas projects. That could result in production of up to 55 million mt/year, or around 1.1 million b/d, of oil and could include investments of up to $30 billion, Rosneft said at the time. It may also include swap operations, oil deliveries and refinery modernization.

Putin met Velayati just a few days before he is to meet US President Donald Trump in Helsinki, for the first official summit of the two since Trump in the office.

Trump earlier said he planned to raise the topics of Syria, Ukraine, arms control, and allegations of Russian meddling in US elections during the Monday talks. The Iran nuclear deal is also likely to be among the topics for discussions.

--Nadia Rodova,

--Edited by Maurice Geller,