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Iran Economy Update
Issue 27/2017 THURSDAY FEBRUARY 23RD
Russia’s exploration agreement with Iran to worth $20 billion
Russia estimates the potential of the agreements on exploration and production of oil/gas in Iran at $20 billion, Russian Energy Minister Alexander Novak said on Wednesday, according to the Sputnik news. "The potential of agreements in this sphere could be valued at $20 billion,"
Novak said in an interview with Rossiya 24 broadcaster. According to Sputnik news, Novak who met with Iran’s Petroleum minister on Monday denied that negotiations on gas swaps were underway. He initially said last August that Moscow and Iran were mulling building a liquefied natural gas (LNG) plant in southern Iran to swap LNG for Russian natural gas deliveries through Azerbaijan to Iran’s north.
Let’s recall that on 15 March 2016, Zangeneh declared after meeting Novak in Tehran that the two sides have agreed on initiating an oil and gas swap mechanism, without explaining details. On 17 Dec 2016, and one week after another visit of Novak and his delegation to Tehran, Zangeneh said that Gazprom has taken steps to initialize gas swap with the Islamic Republic, without giving details. Also, Platts in December 2015 disclosed that a potential gas swap deal between Iran and Gazprom is moving forward. "The issue of gas transit to Armenia was discussed. We are currently studying swap deals with our Iranian colleagues," Platts quoted Gazprom CEO Alexei Miller as saying. Platts wrote that Russian swap supplies of gas to northern Iran would spare Iran the extra costs of transporting gas from production sources in the south to the consumption areas in the north. If this swap arrangement takes effect, Russia would supply gas to northern Iran
and receive [an equivalent amount of] gas from southern Iran in return.
Zangeneh announced on Tuesday that a deal with Russia for supplying 100,000 bpd of Iranian oil will be signed soon. Today, the economic daily Donyay-e Eghtesad published an article titled “what lies beneath the Iran-Russia oil deal,” in which, it argues that “The Iranian oil contract with Russia will result in maintaining one of the coutnry’s most important oil customers, i.e. India because Russia owns the Indian Essar refinery which is currently one of the customers of Iran’s oil.” Donyay-e Eghtesad refers to a report published by Bloomberg in Oct, 2016 that 98% of Essar Group Refinery would be sold to Russian Rosneft and Trafigura (49% each) for about $13 billion in total. However, since half of the oil sale proceeds are supposed to be received in the form of goods, the daily casts doubt if such Russian-made equipment are of high quality.
Slovakian delegation due in Iran
The Slovakian Prime Minister Peter Pelegrini and his ministers of Economy and minister of Finance will visit Tehran in few days, IRNA reported. An agreement will be signed with Iran’s ministry of Economic Affairs and Finance during this visit. The Slovakian delegation is accompanied by representatives of 35 companies in mine, transportation, oil exploration, chemical and petrochemical, construction, electronic, education, consultancy, banking and finance, and wood and furniture industries
