Gazprom and Iran sign a tentative $40BN energy deal as Russia threatens the Europe gas supply. Gazprom will help the NIOC construct six oil fields in addition to the offshore gas reserves in the Kish and North Pars regions.
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At the same time that President Putin is in Tehran meeting with Iranian President Ebrahim Raisi and Turkish President Recep Tayyip Erdogan, Russian state energy company Gazprom has struck a significant contract with Iran for billions. The deal also arrives at a precarious time when Gazprom has stated that it cannot guarantee gas supplies to Europe and the IMF is telling European governments and citizens to start restricting gas usage in preparation for an impending supply “emergency”
Furthermore, both nations are subject to extensive sanctions imposed by the US. Nevertheless, on his second overseas trip since the start of the Ukraine Conflict, President Vladimir Putin arrived in the Iranian capital on Tuesday with conviction. One regional report’s analysis of the optics is as follows: “The company [Gazprom] has declared force majeure [in Europe], which enables it to cut supplies during extreme conditions. This means even as Gazprom is at the center of controversy in Europe, it is making deals in Iran.”
The multi-year agreement may eventually be worth almost $40 billion, according to figures reported by The Jerusalem Post and other publications, though they have not yet been confirmed. “The National Iranian Oil Company (NIOC) and Russian state-controlled energy giant Gazprom have signed a memorandum of understanding worth around $40 billion, according to the Iranian Oil Ministry’s news service, SHANA,” Reuters is also reporting.
“This MoU [Memorandum of Understanding] will be the largest foreign investment in the history of Iran’s oil industry, as it will lead to an investment of several tens of billions of dollars of Russian investment in Iran’s oil and gas fields,” Tansim News Agency of Iran reported. Additionally:
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According to the reports, Gazprom will help the NIOC construct six oil fields in addition to the offshore gas reserves in the Kish and North Pars regions. The development plans cover LNG project development as well as pipeline construction for gas export.
In addition, the IMF is cautioning Europe as Putin poses with Erdogan and Raisi:
A Reuters article from Tuesday pumped some unexpected fresh hope into the debate over whether the important Nord Stream 1 natural gas pipeline to Germany will reopen by July 22 – when scheduled maintenance is supposed to conclude but is far from guaranteed.
Reuters’ “sources, speaking on condition of anonymity because of the sensitivity of the issue, told Reuters the pipeline was expected to resume operation on time, but at less than its capacity of some 160 million cubic metres (mcm) per day.”
There has been no formal confirmation, and this is only the result of Gazprom retrospectively claiming force majeure; the location of the turbine at the center of the controversy, which was first hampered by Canadian sanctions, is still unknown. NatGas’ initial response was underwhelming, possibly as a result of the limited capacity.
It should be underlined that Erdogan, the commander of NATO’s second-largest military, would undoubtedly worry some Western friends given that he is standing shoulder to shoulder with Putin in Iran even as Europe is poised to experience its greatest energy crisis in recent memory.
Additionally, the Kremlin and the Islamic Republic have concurred that they are prepared to eliminate the US dollar from future transactions in bilateral commerce.
Syria is a top priority for the three leaders, and discussions are likely to focus heavily on the previous Astana peace accords, which date back to 2019 and seek to maintain security and the status quo in relation to a “counter terror” arrangement in northern Syria.