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Russia has found a shortcut for oil supplies to Asia and Africa

29 October 2023

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov, Principal Director on Energy studies of the Institute for Energy and Finance, made an interview to the URA web portal on the prospects for the Russian-Iranian energy cooperation development.

— Russian Prime Minister Mikhail Mishustin held talks with Iran's First Vice President Mohammad Mohber in Kyrgyzstan. Earlier, Russian Leader Vladimir Putin and Iranian President Ebrahim Raisi signed intergovernmental agreements on cooperation. What is the meaning and perspective of Russia's cooperation with Iran?

— There are many prospects here. First, the creation of energy corridors (railways and pipeline systems) on the territory of Iran for the transit of Russian hydrocarbons to India, Africa and the Middle East. Secondly, the possibility of using the swap transaction mechanism — in exchange for gas supplies to Iran, we provide similar supplies of Iranian gas, for example, to Russian customers in other countries. In addition, Iran needs Russian investments and technologies in the field of oil and gas production. The country can buy our technological solutions in the oil and gas sector.

— Which countries are interested in an export corridor with Russia through Iran?

— India and Pakistan are interested in building up partnership with Russia. If we are talking about the electric power industry, this is partly Iraq and a number of Central Asian countries. Here, almost all of Iran's neighbors will benefit from the implementation of the project.

— And what difficulties may arise?

— The main problem may be the lack of sufficient infrastructure connectivity of countries within the mainland itself. We have developed port zones in the eastern and southern parts of Eurasia. And the connection between large countries, such as Iran, Pakistan or Russia, is weak.

Another obstacle is political instability in Central Asia. Cooperation cannot be realized without the involvement of Azerbaijan, Afghanistan, Pakistan and a number of other states that have complex relations with each other, or difficulties in relations with Iran.

— Can sanctions complicate cooperation between the countries?

— I don't see any obstacles here. Iran has been under various kinds of sanctions for more than 40 years and it is no stranger to working in these conditions. Russia has also been under sanctions pressure since 2014. The extensive experience of the two countries in overcoming Western sanctions will help to remove the negative consequences of restrictions.

— What other prospects for cooperation do Russia and Iran have?

— Iran can become an electric power hub for the regions of Central Asia and the Middle East. The country has its own developed electric power system. Its connection with the electric power systems of Russia and Central Asian countries will ensure the flow of resources from the Russian Federation to the energy-deficient regions of the Middle East. In this case, we will get an additional opportunity to increase the export of electricity from Russia.

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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