Russia, Iran set oil-for-goods contract talks

6th August 2014, Comments 0 comments

Russia and Iran have agreed to discuss next month a contract for Tehran to export two percent of its annual oil production in an apparent circumvention of sanctions imposed over its nuclear drive.

The controversial deal is just a tenth the size of that discussed by the two close partners last year and appears to be aimed at shielding Russia from additional punitive steps imposed by the United States for violating international restrictions on the Islamic state.

Russia's energy ministry said Tuesday it had signed a memorandum of understanding with a visiting Iranian delegation that paves the way for contract talks to begin on September 9 in Tehran.

The five-year framework agreement covers "the construction and reconstruction of (Iranian power) generation capacities, electricity supply network infrastructure development, as well as oil and gas," the ministry said in a statement.

It added that Russia was also hoping to supply Iran with automobiles and equipment and well as consumer and agricultural goods.

Initial Russian and Western media reports said the deal would see Iran export of up to 500,000 barrels of oil per day (25 million tonnes per year).

But Moscow's Kommersant business daily cited sources as saying the discussions now focused on Russia's purchase of about 70,000 barrels of oil per day -- a small fraction of the 3.2 million barrels per day the US Energy Information Administration believes Iran produced last year.

Kommersant said Russia would purchase the oil "at a small discount" to the price of Europe's benchmark Brent crude rate.

It added that Russia hoped to avoid US countermeasures by making the purchases through a newly-created trading house that would be controlled by the state.

President Vladimir Putin and his Iranian counterpart Hassan Rouhani were expected to put the finishing touches on a final deal on the sidelines of regional summits to be held in Tajikistan on September 11 and the southern Russian city of Astrakhan on September 29.

Top Russian officials have stressed that such deliveries would not break UN sanctions imposed over Iran's alleged ambition to use its fast-expanding nuclear programme to develop an atomic bomb.

Washington and EU nations have imposed their own restrictions over Tehran's nuclear programme that also penalise countries and companies dealing in certain areas with Iran.

The White House in January expressed "serious concern" over the rumoured Russian deal because the quantities under initial discussion would have boosted Iran's oil exports by more than 50 percent.

© 2014 AFP

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