Iran, Russia sign 5-year MOU to boost economic cooperation

Iranians Oil Minister Bijan Namdar Zanganeh and Russian Energy Minister Alexander Novak signed a five-year memorandum of understanding in Moscow on Tuesday to expand trade and economic cooperation.

Novak and Zanganeh are the co-chairmen of the intergovernmental commission on trade and economic cooperation.

The agreement provides for closer cooperation in a number of areas, including in the construction and overhaul of generating facilities, the development of electric grid infrastructure, in the oil and gas sector, and in the area of trade in machinery, equipment, consumer goods, and farming products.

The Russian-Iranian standing intergovernmental commission is expected to have its next regular meeting in Tehran on September 9 to 10 to look at concrete steps to implement trade expansion plans the two countries have.

According to ITAR-TASS earlier reports, Russia’s oil company Gazprom demonstrated its interest to the Iranian market as back as February 2014. Still earlier, the company showed interest in the Anaran project in Iran as an operator of the Azar and Changule oil fields. Gazprom Neft and the National Iranian Oil Company (NIOC) signed a memorandum of understanding on the project in November 2009, but in 2011 the agreement was canceled.

In February 2013, Russian Energy Minister Alexander Novak spoke about the interest of Russian companies to a number of Iranian fields. He then said Russian companies wanted to join Iranian oil and gas projects. Iran, on its part, said it was ready to amend its legislation allowing Russian companies to hold stakes in Iranian projects. Shared participation allows foreign companies to add field reserves (in proportion to their share) to their balance sheets and add yields from these fields to their reports.

In September 2013, Zarubefneft was the first Russian oil company to be granted a permit to operate in Iran. In April, Zarubezhneft and NIOC signed a memorandum on the Khayyam project in Iran. The Russian company however refrained from providing details of its presence in Iran.

Apart from Gazprom Neft, another Russian oil major - LUKoil - reportedly showed interest to Iranian project. LUKoil worked on the Anaran oil block from 2003 but was forced to withdraw from the project after economic sanctions were imposed on Iran. LUKoil was succeeded by Gazprom Neft, the contract with which was terminated in 2011.