Iran and Russia strike an energy deal as the isolation from Europe intensifies. 

Russia and its allies, including Iran, are at the receiving ends of European sanctions. However, they are not stopping them from striking a deal with one another. Iran’s NIOC and Russia’s Gazprom have now struck a deal. 

President Vladimir Putin landed in Tehran on Tuesday for trilateral talks with Iran and Turkey. In his second foreign visit since February, Russia’s primary oil company signed a Memorandum of Understanding (MoU) with Iran’s National Iranian Oil Company. The memorandum is worth $40 billion. 

MoU between Iran and Russia 

Ahead of the trilateral meeting, both the companies struck a deal majorly on 6 oil fields in Iran. 

This MoU has come at a time when both Iran and Russia are under severe sanctions from the West. While the Western nations have imposed sanctions on both countries, the countries themselves have come closer. While it may have declared a force majeure on gas supplies to Europe, the Iranian market is an exception. 

Iran has the second largest gas reserves in the world after Russia and this will be huge for the energy market. According to Iranian media, Iran and Russia have gas reserves which make up to 30% of the world. Iran’s gas production will see an increment of 100 cubic meters of gas, according to a report.

Gazprom will help in the development of 6 oil fields: South Pars and Kish, Mansouri, Abtaimur, Karanj, Azar and Changuleh. Mainly, Kish and North Pars will be the focal point. Moreover, it will also help in the completion of liquified natural gas (LNG) pipelines.  

An Iranian report said that this MoU will be the largest foreign investment in the history of Iran’s oil industry as it will lead to an investment of several tens of billions of dollars of Russian investment in Iran’s oil and gas fields. 

However, Iran is not the only country Gazprom has ties with. Turkey, which is also a participating nation in the upcoming talks also has a deal with Gazprom. TurkStream is a major export gas pipeline stretching across the Black Sea, which recently completed its maintenance. 

3-way talk  

A three-way talk will be held on Wednesday in Istanbul. Ayatollah Ali Khamenei, supreme leader of Iran and Turkey’s President Recep Tayyip Erdogan will attend the meeting. 

This meeting is the second. The first one concluded in June with Tajikistan and Turkmenistan, traditional partners of Russia since Soviet times.  

The point of discussion will be war in Ukraine, Syria and grain supply in Ukraine.  

Since the war began, Ukraine has been facing a threat of nationwide hunger and starvation as Russia’s Black Sea fleet has blockaded the area. Grains, cereals, oil and other agricultural products can neither go out nor come in. Russia has also been accused of deliberately shelling the grain fields and stores according to some media houses. This meeting can pave the way toward change as the matter to lift the block will come for the first time in six months.  

Recently, Iran has also been warned against supplying drones to the Russian military by the US. In the light of all these developments, it is clear that Russia and its allies are pulling themselves together against the West. The West is strong and united as one against Russia but Russia is building its camp with Iran as its major partner. Now that Iran and Russia have moved one step towards shifting the global energy market, the coming few years will be crucial.  

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