Pipes deal: Russia invests $8 billion in Iran's gas projects
Russia is investing $8 billion in Iran's gas projects, and part of this amount — about $5 billion — has already been provided for in agreements, said Kazem Jalali, Ambassador of the Islamic Republic to Moscow. Experts believe that Russia's participation in Middle Eastern developments may allow the export of raw materials not only to Iran, but also to South Asian countries. In their opinion, the supplied volumes will help compensate for the loss of the European gas market — over 100 billion cubic meters per year. The details of the cooperation can be found in the Izvestia article.
Russian investments in gas projects
Russia is investing $8 billion in the Islamic Republic's gas projects, of which about $5 billion has already been provided for in the agreements, while the rest of the agreements are awaiting final approval. This was stated by the Iranian Ambassador to Moscow, Kazem Jalali. He did not specify which projects he was talking about.
It is worth recalling that in June 2023, the Minister of Oil of the Islamic Republic, Javad Oudji, already stated that Iran, with the participation of the Russian Federation, Qatar and Turkmenistan, plans to create a gas hub in the Assalouye industrial area located in Bushehr province on the northern shore of the Persian Gulf. At the same time, Deputy Prime Minister Alexander Novak did not rule out the production of Iranian gas as part of a hub in southern Iran with the participation of Russian companies. At the same time, he emphasized that this idea takes time "to put into concrete forms."
And in June 2024, Gazprom and the National Iranian Gas Company signed a strategic memorandum on working out the organization of Russian gas supplies to Iran. The Russian gas holding company did not disclose anything except that "the parties proceed from the development of long-term mutually beneficial cooperation in the future."
A month later, Javad Oudji announced that the memorandum presupposes the signing by the parties of a 30-year contract for the supply of Russian pipeline gas to Iran in the amount of about 110 billion cubic meters per year and the construction of a new gas transmission system. One part of it is to run along the bottom of the Caspian Sea, and the other is to be built jointly on the territory of Iran from north to south to provide gas to the northern and eastern provinces of the republic, as well as to re—export Russian gas to the markets of the Middle East and South Asia.
In early 2025, Russian Energy Minister Sergei Tsivilev said that Moscow and Tehran had agreed on the route of a gas pipeline to Iran through Azerbaijan, and negotiations were in the final stages of agreeing on the price of supplies. Their volumes at the first stage can reach up to 2 billion cubic meters with the prospect of reaching 55 billion cubic meters. In April, Ambassador Kazem Jalali reported that Iran had prepared all the necessary infrastructure for the transit of Russian gas through its territory, and the issue was 90% resolved.
Izvestia sent inquiries to the Ministry of Energy, the Iranian Embassy, Gazprom and the National Iranian Gas Company.
Russian gas sales markets
The intensification of gas cooperation with Iran is, along with the idea of creating a gas hub in Turkey, one of the directions for diversifying the supply of Russian "blue fuel," experts say.
According to Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation, in the case of Turkey, it was more about creating a pricing center and a trading platform than about a real increase in transit in the short term, since the construction of additional highways under the Black Sea is problematic in the current conditions. The Iranian vector of cooperation initially implied the organization of gas supplies to the Islamic Republic.
— In order to bring gas supplies to Iran to the declared 55 billion cubic meters per year, it is necessary to build new highways — either in the existing land corridor from Mozdok to Ajikabul and further to the Islamic Republic, or along the bottom of the Caspian Sea. Since these projects are under discussion, it is possible to adjust their capacity both up and down, up to 100 billion cubic meters," the expert believes.
According to him, the specific volumes will depend on Iran's own gas needs, as well as on the availability of transportation capacities for pumping it from this state to third countries.
— It's no secret that Iran is considered not so much as the final consumer of Russian gas, but rather as a transit country. First of all, we are talking about the construction of the Mir gas pipeline from the Islamic Republic to Pakistan and further India with a total length of 2,700 km and a capacity of 55 billion cubic meters. The coincidence of the capacity of this route and the declared volumes of the Iran-Russia swap suggests that the main bet was made on the use of this route," the source added.
The actualization of the Russian-Iranian gas projects took place against the background of foreign media reports, citing sources, that Gazprom had abandoned the idea of implementing a Turkish gas hub.
Ekaterina Kosareva, Managing Partner of WMT Consult, believes that despite the lack of official confirmation, Gazprom does not want to risk investments in increasing gas supplies to Europe.
— In June, the European Commission will publish legislative proposals on the abandonment of Russian energy resources. It is not yet known what will happen there. In any case, the Russian gas monopolist will be able to return to the European market if its countries themselves want it. Another issue is that today we can focus on other export opportunities that can compensate for the loss of the European market," she said.
Until 2022, the volume of pipeline gas supplies to Europe was about 145-155 billion cubic meters per year. In 2024, exports totaled 32.1 billion cubic meters, as evidenced by data from Gazprom and the European Network of Gas Transmission System Operators (ENTSOG).
Cooperation between Russia and Iran
Despite the ambitious plans of the two countries, joint gas projects have both their advantages and disadvantages. According to Alexey Grivach, deputy head of the National Energy Security Fund, for now it is necessary to finally agree and start supplies of at least 2 billion cubic meters per year, and only then move on to larger-scale projects in the field of supply and transit.
— In order to transport 55 billion cubic meters, not to mention 110 cubic meters, we need a guaranteed sales market. In other words, there are relevant agreements with India and Pakistan, where there could potentially be such a demand. However, the recent geopolitical escalation there is not conducive to moving forward in the field of organizing gas supplies of this scale, the expert believes.
Alexander Frolov, Deputy General Director of the Institute of National Energy, recalled that Iran is experiencing a growing gas shortage of 150-300 million cubic meters per day. Therefore, the market capacity for Russian supplies will be large.
— The advantages of cooperation are a stable new market. The disadvantage is low domestic prices, which will force Iranians to actively bargain, he believes.
Valery Andrianov agrees with his colleague, who notes among the advantages the large capacity of the domestic market and the favorable geographical location of the state, which turns it into a potential gas hub for organizing supplies to third countries.
The disadvantages, according to him, are the huge reserves of its own gas, in terms of which Iran can compete with Russia, as well as the presence of pressure from the United States, which prevents the implementation of cross-border gas pipeline projects (primarily the Mir project).
"A possible full or partial lifting of sanctions against Iran as a result of reaching a deal on the nuclear program could eliminate obstacles to gas transportation projects," the source said.
But at the same time, the difficulties in developing its own gas potential would disappear, which would make the issue of gas supplies from Russia less urgent, he concluded.
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