Nearly four years after Iran and Russia first agreed to an oil-for-goods swap agreement worth billions of dollars, RT is reporting that the first delivery of Iranian crude oil to Russia under the program has been completed, and the two sides are angling to extend the deal, possible for another five years.
"The agreement is effective; it has been extended for the year, but in general, we think it should be extended for five years," said Russian Energy Ministry Aleksandr Novak.
As we reported more than three years ago, the $20 billion agreement was initially signed in April 2014 when Iran was facing Western sanctions over its nuclear program (they have since been lifted thanks to the Iran deal, but will likely soon be reimposed).
When the sanctions against Tehran were lifted in 2016, Novak said the deal was no longer necessary. However, Novak said in March 2017 that the plan was back on the table with Russia buying 100,000 barrels per day from Iran and selling the country $45 billion worth of goods. Another agreement was later signed in late May.
Current Iranian oil supplies under the program amount to five million tons per year. The first delivery was made in November 2017 and totaled one million tons.
Russia and Iran have also discussed cooperation in energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture. Novak said in February that Russia’s state trading enterprise Promsirieimport has been authorized by the government to carry out the purchase of Iran’s oil through the oil-for-goods program under study by both countries
The oil-for-goods swaps are expected to boost trade between the two countries (while conveniently circumventing the petrodollar system). The nations have also signed six provisional agreements to collaborate on "strategic" energy deals worth up to $30 billion.
Presidential aide Yuri Ushakov said earlier this month that Russian investment in Iranian oil and gas fields could total more than $50 billion.
And in a sign of closer cooperation to come, Ushakov said Iran is weighing whether to enter the Russia-led Eurasian Economic Union - a move that could come within months. A free-trade zone deal would be expected to "trigger further development of our bilateral trade and expansion of investment cooperation."