Russia energy minister, Iran communications minister to discuss cooperation

MOSCOW, July 29. /TASS/. Russian Energy Minister Alexander Novak will hold talks in Moscow on Friday with Iranian Minister of Communications and Information Technology Mahmoud Vaezi. They plan to discuss the development trends and the current state of bilateral economic cooperation. Mahmoud Vaezi last time visited Moscow to attend a meeting of the bilateral intergovernmental commission on December 12, 2015, before lifting the sanctions on Iran were lifted. Prior to that, the ministers met in Tehran in October. This time the talks will be held outside the framework of the intergovernmental commission, which is headed from the Russian side by Alexander Novak. Vaezi co-chairs the commission on behalf of Iran. From sanctions to friendship forever After the UN, US and EU lifted on January 6 the economic and financial restrictions that had been imposed on Iran's over its nuclear program, contacts between Iran and Russia intensified. The lifting of sanctions became possible after the International Atomic Energy Agency (IAEA) confirmed the fulfillment by Tehran of the commitments it assumed under the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program (Iran and six world powers signed it on July 14, 2015). After that the trade and economic cooperation between the two countries intensified. Alexander Novak said during the St. Petersburg International Economic Forum (SPIEF-2016) that Russia and Iran might soon implement joint projects to the tune of $40 billion. However, he added that this is only a minimum potential level. Russia and Iran are also studying the possibility of introducing a free trade regime between the two countries, as well as the transition to settlements in the national currencies. Electricity to Iran Electricity is one of the main points of contact between the two countries. Novak reported that two major contracts totaling $2.5 billion had been prepared with Iran and funding sources found. The sides also prepared contracts on two heating power plants, four power units with the capacity of 350 MW each within the framework of Iran’s electric power industry development. It became known this March that Russia’s Inter RAO - Export (part of RAO UES electric power holding) reached a preliminary agreement on participating in projects for the electric power industry development in Iran. The company concluded a memorandum of understanding with the Water and Power Authority of Iran’s province of Khuzestan for implementing the project for increasing the capacity of the Dez hydropower plant by 720 MW, as well as a memorandum of understanding with Thermal Power Plants Holding Company of Iran aimed at the implementation of the project for the Ramin thermal power plant modernization. Within the framework of the signed document the parties agreed that the Russian company after receiving all the necessary initial data from the Iranian side would prepare technical and commercial proposals for the project’s implementation and will also help the customers to take a tied loan for the project financing in the amount of 85% of the projects’ costs. In accordance with this scheme, Inter RAO - Export acts as a supplier of equipment and engineering services, without making its own investment. Iran’s oil Russia and Iran are also developing contacts in the field of oil and natural gas, as well as equipment supplies. The Iranian authorities expect the international oil companies to invest heavily in the country's oil industry after the lifting of the international sanctions on Iran. In November 2015, Iran held an international conference on the distribution of new contracts for oil production in its 52 fields for representatives of the world's oil and gas companies, including Russia’s Rosneft, Lukoil, Gazprom Neft and Tatneft companies. Iran hopes to present a bill on the admission of foreign investors to the country’s oil and natural gas fields by September. The first contract with a foreign company may be signed within three - four months. The Russian energy minister said that virtually all Russian majors are willing to consider the possibility of taking part in projects for exploration and production of oil and gas in Iran. In particular, Gazprom Neft, Lukoil and Zarubezhneft said they were interested in oil and gas projects in the country. Persian food items Russia and Iran also previously discussed the possibility of supplying fruit and vegetables to Russia in the amount of at least $1 billion a year. After the sanctions on Iran were lifted in January 2016, the parties have announced plans to expand mutual trade, including in agricultural products. The Russian Agriculture Ministry said that Russia was interested in exporting to Iran animal products (beef, poultry meat), grain, vegetable oil, white sugar. Russia intends to buy in the country pistachios, figs, grapes. Russia’s retail networks said they would be ready to increase the share of food products from Iran in their stores, and in some cases these products could replace the Turkish food that is banned because of Russia’s sanctions. According to the Russian Ministry of Agriculture, in 2015 Russia’s exports to Iran amounted to 3.1% of the total Russian exports, and in absolute terms, the exports of agricultural products to Iran amounted to $484.4 million (according to the Federal Customs Service of Russia). The main items in the structure of Russia’s agricultural exports to Iran in 2015 in terms of value were cereals, including wheat and barley (91%), as well as sunflower oil (5.1%). And the imports from Iran in the total volume of Russia’s imports of agricultural stock and food products accounted for 0.7%, or $194.3 million (according to the Federal Customs Service of Russia) in 2015. Russia imported from Iran mainly vegetables, fruit, dried fruit and nuts. Novak said that the Russian side had worked out decisions to reduce customs duties on the import from Iran of pistachios, dates, raisins and other products. The issue is currently considered by the relevant organizations in Russia. Read more