Cartoon by Hassan Bleibel

Russia ready to invest $50bn in Iran’s energy industry

The Financial Times: Iran has touted $50bn worth of potential Russian investments in its oil and gas sector as it seeks to deepen its relationship with Moscow, amid mounting pressure from the US to curb the country’s energy exports and diplomatically isolate Tehran.

Russia has sought to use its vast oil and gas industry to build stronger links with Iran, as part of a strategy to increase its role in the Middle East. This includes supporting the government of Bashar al-Assad in the Syrian war, as relations with the west sour and US sanctions force it to look for new trade and investment partners.

“Russia is ready to invest $50bn in Iran’s oil and gas sectors,” Ali Akbar Velayati, a senior adviser to Iran’s supreme leader, said during a visit to Moscow that included a meeting with President Vladimir Putin. “Military and technical co-operation with Russia is of major importance to Iran.”

Russia’s relationship with Iran is likely to be a key element of talks between Mr Putin and US president Donald Trump in Helsinki on Monday. Mr Trump is expected to demand that Mr Putin move to curb Iranian influence in Syria, and may threaten further sanctions if Russian companies continue doing business with Tehran.

Mr Velayati, Ayatollah Ali Khamenei’s top diplomat, also used a media interview during his visit to say that a Russian oil company had already signed a $4bn deal with Iran that “will be implemented soon”, without providing details. He added: “Two other major Russian oil companies, Rosneft and Gazprom, have started talks with Iran’s oil ministry to sign contracts worth up to $10bn.”

A Russian government official confirmed the $50bn investment plans on condition of anonymity. Gazprom and Rosneft did not respond to requests for comment.

Separately, Russia’s energy minister Alexander Novak said on Friday that Moscow was interested in developing an oil-for-goods program that would see Iranian companies buy Russian products in exchange for oil contracts to be sold to third countries.

The suggestion of deeper co-operation between the two countries’ energy industries comes eight months after Russian companies signed preliminary agreements to invest up to $30bn in Iran’s oil industry, as part of a visit by Mr Putin to Tehran.

However, there is little significant history of energy or economic co-operation between the two countries. After Iran signed the nuclear accord with major powers in 2015, the government of President Hassan Rouhani preferred to work with European oil majors and signed a $4.8bn deal with France’s Total.

But Mr Trump’s decision to rip up that accord and threaten to sanction companies that trade in Iranian oil has led Tehran to work with Moscow. Hardline Iranian politicians have urged Mr Rouhani’s government to expand co-operation with Russia and China to replace European companies unwilling to risk the wrath of Washington.

This year, Russia’s Zarubezhneft and Iranian quasi-private Dana Energy signed a $740m contract for the Aban and West Paydar joint oilfields, the biggest contract to develop an oilfield between the two countries.

While support from Moscow has allowed Tehran to maintain its regional and defence policies, Mr Putin’s decision to also build warm ties with Israel and Saudi Arabia, Iran’s regional rival, has created unease in the Islamic Republic.

The Kremlin’s delicate geopolitical balancing act in the Middle East — Israeli prime minister Benjamin Netanyahu met with Mr Putin a day before Mr Velayati — may founder over Syria, where both Moscow and Tehran are vying for influence in the post-conflict state.

The US, alongside Israel, is insistent that Iran should not be allowed to use the war to gain a foothold in the country, something Russia has countered. Mr Velayati said on Friday that Iran’s presence in Syria was co-ordinated with Moscow and Damascus, and that Tehran saw no gain in negotiating with the US.

“Iranians and Russians will [continue to] stay in Syria to ensure terrorists can no longer be active in that country,” Mr Velayati said at an event held by the Valdai Discussion Club in Moscow. “Iran’s presence in Syria has nothing to do with Israel while Iran sees no reason to materialise Israeli wishes.”