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Iran, Russia agree on major gas transfer deal, funding for new nuclear plant
Iran and Russia have hammered out a deal for the annual supply of 55 billion cubic meters of Russian gas to the Islamic Republic, though the two sides have yet to nail down the price, IRNA reported on Friday, citing officials.
As part of the growing energy alliance, Russia also pledged to finance the construction of a new nuclear power plant in Iran through a state credit line.
The announcement came as Iranian Oil Minister Mohsen Paknejad visited Moscow this week for high-level talks. On Friday, Paknejad met Russian Energy Minister Sergei Tsivilev during the 18th Joint Economic Cooperation Commission between the two nations.
Paknejad said that the gas agreement, equivalent to more than 150 million cubic metres per day, would involve a land route through Azerbaijan.
“Gas will be delivered to Iran in the Astara region. All the necessary coordination is underway between Russia and Azerbaijan,” he said, adding the project would have a “second phase” set to be finalized in the future.
Tsivilev, speaking alongside Paknejad, noted that Russia could supply up to 1.8 billion cubic meters of gas to Iran this year at a price yet to be agreed.
Paknejad went on to say that a new nuclear power plant in Iran would be constructed with financing from Moscow’s credit line.
Moscow had previously helped bring online the Bushehr reactor, Iran’s first.
The Iranian minister also said that four oil contracts with Russian companies were underway, covering development at seven oil fields with a total investment of around $4 billion.
“From our perspective, the figure can and must go up,” he stressed.
Paknejad further underlined Tehran and Moscow’s agreement to step up cooperation in upstream oil development and said the two countries were eager to speed up the implementation of a memoranda of understanding with Russia’s energy giant Gazprom.
Back in June, Gazprom signed a 30-year deal with the National Iranian Gas Co. (NIGC) to transport Russian gas to Iran.
According to Paknejad, part of the long-term plan involves setting up a regional gas hub in Iran, potentially with the participation of Qatar and Turkmenistan.
Iran, which holds the world’s second-largest gas reserves after Russia, is aiming to play a pivotal role by receiving Russian gas and passing it on to neighboring countries, cementing its position as a regional energy hub.
At the close of the commission, Paknejad and Tsivilev inked a final document of bilateral agreements, though the specifics remain under wraps.
Core issues discussed included the Iranian gas hub, facilitating Russian gas exports to Iran, joint nuclear energy projects, expansion of the North-South transport corridor, and easing financial, trade, and agricultural exchanges.
Commenting on the current trade volume, Paknejad noted that Iran and Russia conducted around $5 billion in trade annually, but he argued that “the potential for economic interaction is far beyond the current figure, and a serious leap is required.”
Tsivilev described Iran as “a reliable partner” and noted that bilateral trade volume had risen 16.2% in 2024, hitting $4.8 billion.
Both Iran and Russia remain under US sanctions targeting their oil and gas sectors.
In January, Iranian President Masoud Pezeshkian and his Russian counterpart Vladimir Putin signed a “Comprehensive Strategic Partnership Treaty” covering political, security, trade, transport and energy cooperation.
Russia’s two legislative chambers have already ratified the agreement, with Putin issuing the decree for implementation. However, Iran has yet to push the bill through its own legislature.
Paknejad said the process was “in motion” and expressed confidence that the treaty would soon come into force.
He added that the ratification of the document by the Duma and Federation Council was “a clear sign of Russia’s determination to implement it.”