It was signed during an online ceremony attended by the CEOs of Gazprom and the National Iranian Oil Company (NIOC) on the same day Russian President Vladimir Putin arrived in Tehran for a summit with Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan. (Related: Epic fail: Joe Biden's sanctions have actually benefited the Russian economy.)
According to the terms of the memorandum of understanding signed by the CEOs, Gazprom will provide significant financial support for the development of Iranian natural gas and oil fields, including $10 billion for a project in the Kish and North Pars gas fields in the Persian Gulf and $15 billion to boost production at the South Pars gas field.
Iran is sitting on the world's second-largest reserves of natural gas after Russia. The South Pars gas field is the world's largest gas field, located on Iran's maritime border with Qatar in the Persian Gulf.
Gazprom and NIOC will also collaborate on the completion of liquefied natural gas projects, the construction of gas export pipelines and deals involving natural gas and petroleum products.
Russia-Iran deal will expand Iranian gas production capabilities
American sanctions against Iran have hindered investments and prevented the country from extracting and exporting more gas and other fossil fuel products. Reports said Iran only exports around 800,000 barrels of oil per day, but the country has been working overtime to find a way around American sanctions and increase crude oil exports.
NIOC has dealt with Russian companies in the past despite American sanctions, and Iranian media has reported that both NIOC and Gazprom are not concerned about sanctions.
The Iranian government has also been seeking some $140 billion in foreign investments for its oil and gas industries. The recent $40 billion deal with Gazprom represents the single largest foreign investment in the history of Iran's energy industry. It will likely lead to tens of billions of dollars worth of additional Russian investments following the development of Iran's oil and gas fields.
Iran already produces some 700 million cubic meters per day (cm/d) of natural gas from 37 offshore platforms in the South Pars field. Once the Kish and North Pars gas fields are developed with Russian aid, it will add an additional 100 million cm/d of natural gas to Iran's daily production capabilities.
"Iran and Russia have a total of 70 trillion cubic meters of gas reserves, which is 30 percent of the world's gas reserves," said Iran's energy sector in a statement. "Therefore, these two countries play a very important role in ensuring the world's energy sustainability."
"The world needs Iran's oil, and the share of Iran's oil exports cannot be removed from the world market, and this shows that Iran is a reliable and stable country for supplying energy to the world," said NIOC CEO Mohsen Khojasteh Mehr.
The energy deal between Russia and Iran is part of Putin's push for more bilateral strategic agreements with the Iranian government. American intelligence claims the deal involves the transfer of technology, including Iranian drone technology that Russia is looking to acquire.
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