Russia, Iran to Finalize Power Plant Deal

Russia, Iran to Finalize Power Plant DealRussia, Iran to Finalize Power Plant Deal

Tehran and Moscow are in advanced talks to build a 1,400-megawatt power plant in southern Iran, expanding their decades-long cooperation in the energy sector to the post-sanctions era.

"Iran has signed three [preliminary] agreements with Russia, including the construction of a 1,400-MW power plant along with a water treatment unit in the port city of Bandar Abbas," Deputy Oil Minister Houshang Falahatian said, elaborating on economic and energy talks held with Russian officials in Tehran last month, ISNA reported.

The new power plant will work with an efficiency of more than 40% and its water treatment unit will have a daily capacity of 200,000 cubic meters.

The power plant will be built via Russian finance under a turnkey contract, based on which the contractor will complete the project and hand it over in fully operational form to the client, which needs to do nothing but "turn a key".

Russian engineering company Technopromexport will implement the project, according to Falahatian.

Russian Energy Minister Alexander Novak, who visited Tehran last month at the head of a 40-member delegation of Russian companies, announced that Russian firms had signed $5 billion worth of deals to develop Iran's power plant sector.

Tehran-Moscow cooperation in the power plant industry stretches back to 1995, when Russian contractors took over Bushehr Nuclear Power Plant from the Germans.

The power plant continued to face technical and financial obstacles, but it officially went on stream in September 2011 and reportedly reached full capacity in mid-2014.

Earlier this year, Russian Deputy Foreign Minister Sergei Ryabkov hoped Moscow will continue work on at least two more power plants in Bushehr.

"We hope that the first Bushehr power unit will be followed by others. We would not want to limit our bilateral cooperation with Iran even to Bushehr-2 or Bushehr-3," Ryabkov told reporters in August.

However, the ambitious plan will come at a whopping cost of $11 billion, according to Novak.

The other two agreements include the synchronization of Iran and Moscow's power grids and works on deepwater drilling in the Iranian territory.

The energy agreement between Tehran and Moscow is a complicated project that will also involve Azerbaijan, Armenia, Georgia and Turkey, and officials have not speculated if and when the project will be carried out.

In addition, Russian companies are slated to conduct seismic studies in western and central regions of Iran for deepwater drilling to explore new oil and natural gas reserves.

The two sides pledged in November to raise annual bilateral trade to $40 billion, with the volume expected to reach $10 billion in the short term.