Iran, Russia ink $40 bln energy cooperation deal

The state-owned oil companies of Iran and Russia signed a memorandum of understanding (MoU) worth $40 billion on Tuesday ahead of Russian President Vladimir Putin’s meetings in Tehran.

The National Iranian Oil Company (NIOC) and Russia's Gazprom sealed the mammoth deal in an online ceremony with NIOC chief executive Mohsen Khojastehmehr and Gazprom deputy chairman Vitaly Markelov signing the documents.

The MoU is expected to attract multi-billion-dollar investments in the sanctions-battered energy sector of Iran, including gas and oil.

NIOC officials have described the ambitious deal as "the biggest strategic investment in Iran's oil industry" in the country's history.

Iran possesses the world's second-largest gas reserves after Russia, but years of US sanctions have prevented its full exploration. Even Russia for years was wary of venturing into Iran's energy sector, dropping many projects for the fear of US sanctions.

The energy cooperation deal between the two countries came ahead of Putin's bilateral and trilateral meetings in Tehran with Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan.

According to Shana, a website affiliated with Iran's petroleum ministry, the highlights of the cooperation deal include the development of the Kish and North Pars gas fields, pressure enhancement of the South Pars field, development of six oil fields, gas and product swap, completion of LNG projects and construction of gas export pipelines.

Khojastehmehr was quoted as saying that the NIOC "will not miss any investment opportunity" with Russian firms, including Gazprom, the multinational energy company headquartered in Saint Petersburg, Russia.

He further said that $4 billion worth of contracts have already been signed with Russian firms for the development of oil and gas fields across the country.

Putin's visit to Iran, his first outside the former Soviet Union since he launched the war on Ukraine in late February, is being watched with great interest across the world amid an unprecedented crisis in the energy market and soaring oil prices.

On Monday, Kremlin spokesman Dmitry Peskov said the two countries will gradually move away from the practice of using the US dollar in bilateral trade.

Trade exchange between Russia and Iran jumped 31 percent over the last few months, as Moscow tries to circumvent sanctions imposed by Western countries.