Look Out Saudi Arabia: Russia, Iran Forge Energy Partnerships, May Form New Bank To Fund Projects

Tyler Durden's picture

One of the key things to understand about the war in Syria is that in many ways, it’s a perfect example of how the energy-geopolitics nexus has tremendous explanatory power when it comes to analyzing the events that shape the world and show up on the nightly news. 

As we’ve been at pains to explain for quite some time, Bashar al-Assad’s decision not to sign off on the Qatar-Turkey natural gas pipeline and instead to support the proposed Iran-Iraq-Syria line, may very well have prompted Qatar and Assad’s other regional rivals to begin the process of fomenting discord within Syria’s borders. The strategy was familiar and indeed, it was spelled out in a leaked 2006 diplomatic cable from Washington’s then-acting Deputy Chief of Mission in Syria William Roebuck: play on the sectarian divide. Thus, Sunni extremists were emboldened to take up arms against the regime and the rest, as they say, is history. 

Note that the difference between the two proposed pipelines mentioned above comes back to power politics. That is, Iran’s regional sphere of influence depends on preserving close ties between itself, Iraq, Syria, and Lebanon. The Islamic Line would run through all of those states. The last thing Saudi Arabia and Qatar want is for Iran to embark on a regional power grab and so, Syria became the swing state. Dethrone Assad and Tehran’s supply line to Hezbollah is broken - the door would then open up for Riyadh to essentially install a puppet government (with Washington’s help under the guise of promoting “democratic regime change”) that would be open to helping Qatar get its natural gas to Europe. That’s where the Russians come in. The more non-Gazprom supply that gets to Europe, so much the worse for the Kremlin in terms of the leverage Moscow has with the EU. 

Again, it’s the quintessential example of how energy and geopolitics conspire to create the events that shape the course of history. 

Of course the interesting thing about the above is that both the Qatar-Turkey line and the Islamic Line pipe gas from the same field and both lines aim at supplying Europe. The question then, is this: why should Moscow prefer one over the other? 

One more time: it comes back to power politics. 

Russia and Iran are allies and so, as we’ve said on a number of occasions since Moscow stepped up its involvement in Syria, there will undoubtedly be a number of deals between The Kremlin and Tehran that ensure Russia’s interests are protected once Iran’s regional power grab is complete and once economic sanctions are lifted. 

Sure enough, we’re already beginning to see the beginnings of what will likely be a series of energy partnerships between the Russians and the Iranians. Here’s Reuters:

Russian Energy Minister Alexander Novak said on Friday Kremlin-controlled gas producer Gazprom has offered gas supplies to Iran under a swap arrangement, and similar oil deals were also under consideration.


Moscow has boosted efforts to foster political and economic ties with Tehran and increased its activity after a decision in July to lift international sanctions on Iran in principle. The ending of sanctions, related to Iran's nuclear programme and including restrictions on oil exports, have yet to take effect.


Novak said Iran normally supplies gas to its northern regions from the south of the country and the proposed swap deals would help to cut its transportation costs.


"We could supply gas through to Iran's north and receive gas from the south (of Iran) via swap deals in the form of liquefied natural gas or pipeline gas," Novak told Russian state-run TV Rossiya-24.


"Similar swaps could be done with oil. This is a reduction of transportation costs. Our colleagues have given a positive response to the idea," he added.

And a bit more from Sputnik

Under the plan, Iran will receive Russian oil and gas through its northern terminals on the Caspian Sea and will sell its oil to Russian clients from its southern terminals. A similar mechanism of oil swaps is used by Iran in its bilateral trade with other Caspian states, including Azerbaijan, Kazakhstan and Turkmenistan.


During the visit, Moscow and Tehran signed a number of agreements. Novak said that the deals are worth a combined total of up to $40 billion.

Details regarding the purported $40 billion in new projects are sparse but consider the following bullets from Bloomberg out this morning (note the suggestion that Russia and Iran will set up what amounts to a joint development bank): 

  • Russian oil cos. ready for competition w/ Iranian oil
  • Iran to hold road show on oil development deals soon
  • Russia considering projects of up to $40b in Iran
  • Russia, Iran agreed to consider setting up bank to fund projects
    • Russia may invest $2b in Iran power projects
    • Bushehr nuclear power unit may cost $11b
    • Zarubezhneft considering projects worth $6b in Iran

Notably, Iranian Oil Minister Bijan Namdar Zanganeh said last week that Tehran is seeking around $100 billion in oil and gas investments by 2021. What the above seems to suggest is that Russia is willing to bankroll nearly half of that amount.

Meanwhile, the Russians are putting on a brave face in the face of Riyadh's attempt to essentially starve out the competition. Here's Novak again:

"OPEC’s self-established quota of 30 million barrels per day (bpd) is fully used by OPEC countries. Subsequently, if a member exceeds its quota, OPEC should redistribute its production among other members."


It’s very important whether OPEC will rebalance or if there will be extra output. There is a lot of uncertainty, but in general we are ready for it. And our oil companies are ready for this competition.”

And here's what Zanganeh had to say on the same subject (via Bloomberg):

Iran’s oil minister sees no imminent change in OPEC’s output strategy even as he urged fellow members of the group to cut their collective production to buoy crude to a range of $70 to $80 a barrel.


Iran is preparing to ramp up its own output once world powers remove sanctions on its economy, regardless of any decisions by the Organization of Petroleum Exporting Countries, Oil Minister Bijan Namdar Zanganeh told reporters Monday at an industry conference in Tehran.


“No one is happy” with prices at current levels, he said. “OPEC should decide to manage the market by reducing the level of production,” Zanganeh said. “It seems that the atmosphere is not well for making a change in the market.”

No, the "atmosphere is not well," because again, the Saudis are out to achieve "ancillary diplomatic benefits" (i.e. geopolitical advantages) by keeping crude prices low, and those benefits include squeezing the Russians and perhaps limiting the revenue Tehran can bring in when Iran returns to the market.

As you can see, all of this is inextricably linked and it looks as though Russia and Iran may be on the verge of attempting to challenge the Saudis for domination of the oil market (don't forget Moscow surpassed Riyadh as the number one supplier to China for the second time this year in September). 

Is a "new oil order" in the works? We shall see.

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pot_and_kettle's picture

Can someone point out when Syria didn't sign off on the Qatar - Turkey pipeline and when the pipeline was first proposed? This is news to me and seems like the watershed event for what the zio-US fomented in that part of the world.

GrowerJohn's picture

It would be nice to see if Bitcoin could somehow play into this new banking enterprise, but somehow I doubt it will. I think more people need to learn about how to use the currency before we start seeing governmental transactions conducted in it.

I hope at some point soon that Bitcoin becomes more widely used than Paypal.


Manthong's picture

Heads are going to roll for this.

giovanni_f's picture

Maybe it was a bad idea to displace Mossadeq by the CIA and MI5 thugs.

Omen IV's picture

Brennan in the wikileaks release from his AOL account said "we made a mistake in Iran" should have reversed 7 years ago - truth is they should have reversed 1953

McNamara said "we made a mistake " as well about Vietnam - if you remember


There are no mistakes - the people making decisions in DC believe there are no long term relationships only endless victims - the short term decision critieria always comes back to bite them.

Russia /China / Iran joined at the hip can be the ultimate world domination partnership  for the central asia continentfor the next 100 years - and enough for all of them - they treat each other as equals - The USA could never do that


UK lap dog is showing their colors - I think Europe will bolt from US vassal status and take short term hit



learning2's picture

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Get one for your car too!!!!



BarkingCat's picture


I hear that Mexican drug cartels now accept bitcoin.They will deliver virtual cocaine for your virtual currency.

Urban Redneck's picture

I don't know that Assad ever seriously considered the Qatar - Turkey pipeline, because he announced the 4 Seas Strategy back in 2009.  Since the goal of that initiative is basically to setup Syria as a direct competitor to Turkey as the crossroads of EurAsian energy flows.  Moreover it depended on Iran (which incidentally was supposed to bring the Iran-Pakistan pipeline online last year (ETA is now 2-3 years... so someone doesn't want Iran sucking gas out of the South Pars/North Dome field). 

What I do know is that less than nine months after Damascus & Bagdad officially signed on to the Iran-Iraq-Syria pipeline, ISIS magically appeared out of the existing Sunni Triangle resistance and siezed Fallujah which (literally) threw up a roadblock in the Iraq section of the pipeline, before ISIS turned its attention to anything in Syria.

Oh... and for double wierd spookiness - there is also the history of foreign relations between Syria and Qatar to consider.  Assad and Al Thani were all BFF way back in the day, and remained so (publicly at least) right up until the Tehran Tango started, and now the Emir wants Assad's head on a plate.  

4shzl's picture

Next step: open that eastern front on the Arabian Peninsula.


Duc888's picture





Ahhhhhh (rubbing hands together) I love it when a plan comes together....

Kaiser Sousa's picture

yep..like i said before...

coming together like seaty butt cheeks....

Pooper Popper's picture

That's great, it starts with an earthquake
Birds and snakes, an aeroplane, Lenny Bruce is not afraid
Eye of a hurricane, listen to yourself churn
World serves its own needs, don't misserve your own needs

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) Pooper Popper Oct 23, 2015 12:58 PM

I don't like spider n snakes:


Sergeiab's picture

Motherfucking towel dudes

alphahammer's picture
alphahammer (not verified) Oct 23, 2015 12:55 PM


Yea that will work. If they sell to the global fungible market they will still need to resolve to the US dollar. Or is this some hair brained scheme to sell to each other? Sort of like "Hey we have Vodka, you have goats. Let's do a deal"

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) alphahammer Oct 23, 2015 1:06 PM

And its like, I see a wave and its like, "Hey dude, let's party!"

Bottom line:   it simply brings more oil (nat gas) to market.  Iran wants the capital whether its 60$/barrel or 30$/barrel.

Or we have marriagable women looking to get the hell out of Russia and you have camels looking to get the hell out of Iran.

You drill our women for awhile and we'll drill your camels!

Why is the camel called the "ship of the desert"? 

Because its filled w/ Iranian semen.



atomicwasted's picture


BTW Persian chicks are smoking hot.

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) atomicwasted Oct 23, 2015 1:28 PM

There's one that works in the lab down the hall and she looks like a jackal.

And not this "Jackal" either:  https://www.youtube.com/watch?v=iQk9hbI9OLE

atomicwasted's picture

It's called a generalization.  Obviously not every Persian chick is a smokin' hottie.  But loads of them are.  I'll take a Persian over a Russian/Ukrainian babushka any day of the week.

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) atomicwasted Oct 23, 2015 2:24 PM

Its ALL pink inside.

Freddie's picture

Persia has been around thousands of years.  

A person may not like the Russians or Iranaians but they "ain't" going anywhere.  They are also pretty tough on the battlefield (see Hezbollah).  They also stood up for Syrian and the Syrian people including Syrian Christians.

Persians are a lot smarter than Saudis too.

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) Freddie Oct 23, 2015 1:35 PM

Like in the 1980-1988 Iran-Iraq war? 


WWI's western front all over again.  I guess they smartened up in the last 27yrs.

atomicwasted's picture

I think the donut I had for breakfast was smarter than the Saudis.

MadVladtheconquerer's picture
MadVladtheconquerer (not verified) atomicwasted Oct 23, 2015 2:21 PM

Not if it was a Tim Horton donut.

Salah's picture

why there's so much inbred craziness in the middle east: too much consanguinity


Baby Bladeface's picture
Baby Bladeface (not verified) MadVladtheconquerer Oct 23, 2015 2:05 PM

Ass, it's what you have instead of the head. Hence all the shit that you think thoughts. Try the rehabilitation of morons to sign up.

me or you's picture

New oil order without the petrodollars.

JustObserving's picture

Now if Russia can push enough ISIS fighters from Syria into Saudi Arabia to disrupt the kingdom, or a stray missile meant for Syria drifts into Saudi Arabia, the game will be on.  The corrupt, criminal, cruel Saudis who have been sponsoring assorted terrorists for decades and funded the Pakistani nuclear bomb, will get a taste of their own medicine

Savyindallas's picture

Yes russia should fund Isis to take over Saudi Arabia   -the prize is Saudi oil  - they can all be rich. At that point they will become secular capitalists and can spend all their money on ferraris, smack and whores. What's to not like about that? 

alphahammer's picture
alphahammer (not verified) Oct 23, 2015 1:03 PM


Wait what????

Notably, Iranian Oil Minister Bijan Namdar Zanganeh said last week that Tehran is seeking around $100 billion in oil and gas investments by 2021. What the above seems to suggest is that Russia is willing to bankroll nearly half of that amount.

With what? The Russian economy is on the rocks. They literally have hungry people, they are blocked from international lending/banking and they are going to some how "magically" come up with $50,000,000,000? From WHERE?

Please... I'm beggining to think Putin and Elon Musk are long lost cousins...

atomicwasted's picture

"blocked from international lending/banking"

Do tell.  Perhaps China would be surprised to hear this.

alphahammer's picture
alphahammer (not verified) atomicwasted Oct 23, 2015 2:11 PM


Yea lets take a look. Good of you to point that out.


China Not So In Love With Russia After All

JUN 17, 2015

Shunned by the West, Russia may want to promote its new Chinese love affair to the world these days, but Czar Romeo shouldn’t get his hopes up.

Russia’s second biggest lender, VTB Bank, said that most Chinese banks have foregone doing business with them. The reason? Western sanctions against VTB. China lenders don’t want to get caught up in the drama and — having more business with the U.S. and Europe than with Russia — have opted to play it safe.

“China’s ambiguous position regarding Russian banks in the wake of US and EU sanctions is a key issue holding back progress toward greater bilateral cooperation,” VTB Bank First Deputy Chairman Yuri Soloviev write in an op-ed published by the FinanceAsia news agency on Tuesday.

Baby Bladeface's picture
Baby Bladeface (not verified) alphahammer Oct 23, 2015 2:11 PM

Wipe your eyes, you blockhead, and see what's happening around you, if the brain has any.

Freddie's picture

Anything that smacks the shit out of the Saudis or Qatar makes me happy.  What they did to Syria with the help of the USA, Turkey, UK, Israel and others is sickening.

HowdyDoody's picture

So Saudi, along with the USA, Turkey, UK and Israel make up the Five Arseholes?


Peter Pan's picture

More energy projects?

I doubt it.

The world has more oil than it needs and definitely too much excess capacity.

But I gladly stand to be corrected especially if it can put an end to the despicable Saudis.

MalteseFalcon's picture

Whoa!  Hold on there, Scooter.

The world is running out of oil.



Urban Redneck's picture

The world is probably running out of $44 WTI oil, but they may discover a supply of WTI with a 3 handle before they have to resort to the 5 handle and higher stuff...

MalteseFalcon's picture


Whatever the fuck you say dude. 

Last I heard it ran out in the 70's.

dustyfin's picture

I think the world is not quite as your script tells you it is.



  • Russia is not poor.
  • Russians are not starving
  • There's plenty of finance available for Russian projects
kaboomnomic's picture

Oh look... a NOBODY, so concern of other country methodes of finamcing their projects.


While this nobody countries, needs more DEBT, just to get the foodstamp going.

Mm... Mm... Mn... Nice try kids. Try agaim sometimes..

Joe Tierney's picture

When all the pieces are soon put in place Russia and Iran are going to make the Saudi's an offer they can't refuse - dump the petrodollar and join the anti-petrodollar axis or else face total economic and financial ruin at the hands of the new Eastern axis in the Middle East.....

SweetDoug's picture

I love it.

Hoisted on their own Prisoner's Dilemma petard.

"You cut first!"


Cheap oil for the rest of our lives.

But not cheap gas. They've screwed us there.


anonnn's picture

 "it’s the quintessential example of how energy and geopolitics conspire to create the events that shape the course of history. "

Rather an exaggeration.

In England, the Hakluyt team began the  first global survey of the worlds resources and began publishing in early 1600's. It had become clear that British trade and control of sea-lanes, etc. was necessary for their survival on a spherical planet. That survey is still ongoing.

By 1900 there was full press to dominate tne new petroleum miracle as the most useful and lowest-cost source of energy.

Simultaneously, the British Empire was judged to be shrinking and unable to support the conquest and control sdesired for the future. Some larger nation state must be used as a proxy to support the quest.

Who might that possibly be ?

EndGamesAreFun's picture

More proof that Putin's objective is Saudi Arabia. Once he has them by the balls, he has Europe and OPEC by the balls. Meanwhile, President Mom Jeans is fighting back with an empty climate change agreement. If Putin is playing chess what is Obama playing? It ain't even checkers.

alphahammer's picture
alphahammer (not verified) EndGamesAreFun Oct 23, 2015 6:27 PM


"More proof that Putin's objective is Saudi Arabia."

Dude please... What in the world makes you think Putin would be so stupid to try and take Saudi Arabia?

1) The West would jump Putins ass in a nanosecond.

2) See item #1. In that case we are talking a world war. In that case Putin has what? Besides lots of smoking holes, he has no customers for his ill gotten gain (which is impossible BTW)

3) Are you referring to the same game of chess whereby Putin is leaving Ukraine very suddenly for some reason, the fact that Putin spent ~80% of the Russian military budget in the first months of the year, the fact that Russian troops are now starting to get dead in Syria whilst the ENTIRE WORLD watches Putin purposely miss ISIS. Is that the chess describe? If so, maybe you should look up the game, because it would seem you've never played before...

Lucky Leprachaun's picture

Once again I ask what's the big deal about Syria and the Qatar pipeline.  It could go through Iraq-Turkey instead without going through Syria......