Wednesday, August 27, 2014

Russia steps up economic collaboration with Iran | Russia Direct

by Olga Malikova

In September, Russia and Iran plan to sign a set of bilateral agreements on trade and economic cooperation. The two countries are also expected to discuss the recently signed memorandum of mutual understanding, which provides for the delivery to Iran of Russian equipment and consumer goods in exchange for Iranian oil. Despite the threat of fresh U.S. sanctions against Iran if the deal with Russia goes ahead, Tehran is looking to strengthen cooperation with Moscow.

The bilateral memorandum signed on August 5 provides for the expansion of trade and economic cooperation in the fields of energy and energy-related infrastructure, particularly the oil and gas sector, as well as “the supply of machinery, equipment, consumer goods, and agricultural products.” In exchange, Iran will ship 500,000 barrels of oil per day in the other direction. Specific contracts and agreements could be signed during the meeting of the intergovernmental commission slated for September 9-10 in Tehran.

Moscow believes that the agreement could have a significant impact on the economic development of both countries. Russia, in particular, is attracted by the prospect of greater access to Iran’s highly promising hydrocarbon reserves.

Moreover, by the Kremlin’s logic, Russian companies will have more opportunities to increase exports of their high-tech equipment abroad.

In recent years, many experts have noted a rising imbalance in oil exports from Russia and the country’s proven reserves. Russia is second only to Saudi Arabia as a supplier of oil to the world market, but its proven reserves are not so vast.

Russia’ proven reserves are a mere 93 billion barrels, to be precise, or 5.5 percent of the world's proven oil reserves. Many fields in Russia have peaked, and new deposits are located in complex geological and climatic conditions.

Complete story at - Russia steps up economic collaboration with Iran | Russia Direct

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