Russian-Iranian oil deal finalized

The oil-for-food deal between  Russia and Iran is done, Iran’s petroleum minister Bijan Namdar Zanganeh said, adding that Iran expects supplies from Russia.

"The deal is finalized and being carried out by the Russian side," he said. "There are no difficulties on our part, we signed the contract, everything was coordinated between the parties," Zangane added. "We are expecting supplies from Russian oil companies," TASS cited the Iranian minister as saying.

Earlier, the head of the Russian Ministry of Energy Alexander Novak said that the cooperation of Russia and Iran on the oil-for-food deal could begin as early as 2017. 

A senior scientist at the Institute of Oriental Studies of the Russian Academy of Sciences, Stanislav Pritchin, speaking with a correspondent of Vestnik Kavkaza, noted that the list of goods that Russia will supply to Iran in exchange for oil have not been yet published, but we can expect that it will be military products. "None of the participants of the talks gave an expanded information about what could be the subject of supply from the Russian side in exchange for oil - however, we can say that after the lifting of sanctions, technological equipment supplies, linked to the military-industrial complex, are possible, of course, of a defensive nature," he said.

The activation of the Russian-Iranian cooperation is connected with several factors, according to the expert. "First, it is due to a successful re-election of Hassan Rouhani for a second term. The President takes a very constructive position with regard to cooperation with neighbors, including with Russia. The Russian Railways company is actively working on the construction of railways and electrification of existing ones in Iran, we are also engaged in the generation of Iranian heat - and power stations, so there are options for Russian supplies to Iran under the deal," Stanislav Pritchin said.

The expert expects that Iranian oil will allow Russia to intensify trade with other countries. "Russian oil tankers receive Iranian oil in the Persian Gulf, from which  the geography of deliveries can be the widest. For example, it is possible to intensify cooperation with China and India, conclude deals directly. It is a very positive development for Russian oil companies and Russia as a player on the international energy market," he stressed.

The deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, in turn, described the deal as protection of both sides from possible economic pressure on Russia and Iran. "Iran now has the possibility of direct oil supplies to consumers, so the issue of oil exchange for goods is less relevant for the republic now. Of course, since this format has received an institutional basis, there are prospects for such cooperation, but barter transactions should be viewed more as an insurance mechanism from sanctions, which can be imposed by third countries," he explained.

The execution of the deal may be in question due to the expected shortage of Iranian oil. "Iran has already reached its peak in increasing its oil production, and it has no additional volumes. It was not very interesting to Russian oil companies, since we have growing domestic production and even more growing oil exports," the expert recalled.

"Initially, it was a political action. I think that the format can be preserved, and several transactions within its framework can be carried out in order to test its performance, but then it will be 'frozen' for a rainy day," Alexey Belogoriev summed up.