Tehran-Moscow Oil Trade Within Weeks

Banking problems to open a letter of credit to export Iranian oil to Russia have been resolved and the two states will embark on crude trade in the near future, the deputy oil minister for international affairs said.

"As per the terms of the contract, the National Iranian Oil Company will begin selling 100,000 barrels per day of oil to Russia within weeks and be repaid equally in cash and kind," Amirhossein Zamaninia was also quoted as saying by Shana on Saturday. According to Zamaninia, Moscow has been in talks over purchasing oil from Iran and preparations have been made to clinch a final deal as soon as legal details of the contract are finalized.

"In addition to strengthening ties with Russia in the oil industry, the deal will help build closer bilateral relations in other sectors," Zamaninia said without elaboration.

The official believes that the deal can be seen as a move to further bolster Tehran-Moscow's economic ties, as the two countries continue to expand their strategic partnership in the region. According to reports, Russian companies have begun the construction of two new nuclear power plants in southern Iran in a deal estimated to cost around $10 billion. The new power stations will be built over the next decade. Russia is also building a thermal power plant in Hormozgan Province with a total output capacity of 1,400 megawatts.

"We are discussing the last details of regulatory documents," Russian Energy Minister Alexander Novak was quoted as saying by TASS last month, confirming that Moscow and Tehran will soon agree upon conditions for the sale of 100,000 barrels of oil per day.

According to Novak, supplies can be either physical or swap-based. The purchases will be carried out via Promsirieimport, a trading unit of Russia's Energy Ministry.

Oil Minister Bijan Namdar Zanganeh was quoted as saying by Russia’s RIA in September that Iran signed an agreement with Russia under which it would sell, or rather barter crude oil to Russia in exchange for certain products and services.

"The deal has been concluded. We are just waiting for the implementation from the Russian side. We have no difficulties; everything is coordinated between the parties,” Zanganeh said.

According to Reuters, the $20 billion agreement was initially signed in April 2014 when Iran was under international sanctions over its nuclear program. Russian traders were to participate in the sale of Iranian oil. In exchange, Iran wanted essential goods and technology from Russia.

In March 2017, Novak said Russia would buy 100,000 barrels per day from Iran over an unspecified period and sell the country $45 billion worth of goods, Russia Today reported.

Novak had announced in February that Russia’s state trading enterprise Promsirieimport was authorized by the government to carry out the purchase of Iran’s oil.

According to Ali Kardor, chief executive of NIOC, Iran is pumping 3.95 million barrels of crude oil daily with exports at 2.2 million barrels per day.