On July 19, Russia’s Gazprom and Iran’s National Oil Company signed a memorandum of understanding worth roughly $40 billion. As per Iran’s oil ministry’s news agency SHANA, the document was signed during an online ceremony between NIOC CEO Mohsen Khojastehmehr and Vitaly Markelov, Deputy Chairman of the Gazprom Management Committee.
The main highlights of the deal include the development of Kish and North Pars gas fields, pressure enhancement of South Pars field, development of 6 oil fields, gas and product swap, completion of LNG projects, construction of gas export pipelines and other scientific and technological cooperation. Notably, Russian President Vladimir Putin is on a trip to Tehran for a summit with his Iranian and Turkish counterparts.
It is noteworthy that Iran has the second-largest gas reserves in the World. However, the sanctions imposed by the United States hindered access to the technology and slowed down the pace of gas exports.
Sanctions on Russia
Following the Russian military attack on Ukraine, the United States and other western countries imposed sanctions on Russia. The idea was to limit funding to Russia that it might use to fund the war against Ukraine. However, countries including the US, UK and others remained the highest importers of gas and fossil fuels from Russia for several months after the sanctions were imposed, underscoring the dependence of the west on Russian energy imports.
Sanctions on Iran
The US and European Union have also imposed several sanctions against Iran for its nuclear program and alleged support to Hezbollah, Hamas and Palestinian Islamic Jihad. The sanctions that are in place make it difficult for Iran to have access to the latest technology and export gas and other fossil fuel products that the country is rich in.
While Iran has long been at the receiving end of the US-led western sanctions, the embargo was tightened after former US President Donald Trump walked out of the Iran nuclear deal in May 2018. However, it did little to dissuade Tehran from pursuing its nuclearisation objectives.