Russia, Iran ‘Hammer Out Mechanisms’ for Swapping Oil and Gas Supplies in Face of Sanctions

In March, the US banned all imports of Russian oil and gas as part of America’s sanctions against Moscow over its special military operation in Ukraine. As for Iran’s oil industry, it has for years been operating under US sanctions over what Tehran says is a purely peaceful nuclear program.

Moscow and Tehran continue to discuss swapping supplies of oil and gas, Russian Deputy Prime Minister Alexander Novak told reporters on Thursday, as Russia is challenging Western sanctions introduced over its ongoing special military operation in Ukraine.

"We are already working with them [the Iranian side] in this direction, hammering out separate routes and mechanisms pertaining to oil and gas swap deals,” Novak said.

He spoke after the National Iranian Oil Company NIOC and the Russian energy giant Gazprom signed a memorandum in July that stipulates bilateral cooperation on developing the Kish and North Pars gas fields, six oil fields, as well as maintaining pressure at the South Pars field, the world’s largest gas reservoir.

In addition, the memorandum envisages exchange operations with natural gas and oil products, the implementation of LNG projects, and the construction of export gas pipelines.

The Iranian news agency Shana reported at the time that a potential deal between the two companies could be worth about $40 billion.

Iranian Deputy Oil Minister Ahmad Asadzade has, meanwhile, told Sputnik that his country looks to use the memorandum in order to clinch an array of oil and gas agreements with Russia within six months, hoping for greater unity with Moscow on the situation in the field of energy resources.

This followed Novak saying earlier this year that “Iran could become a key transportation and logistics hub for ensuring the mutual transportation of goods.” He added that the annual goods turnover between Russia and Iran has potential to rise to 50 million metric tons over the next few years from the current 15 million tons.

On February 24, Russia began a special military operation in Ukraine, responding to calls for help from the Donbass republics of Donetsk and Lugansk. The West and its allies retaliated by imposing packages of “severe” sanctions against Moscow, with the EU pledging to end its dependence on Russian energy supplies.

In particular, the EU’s July 21 package included a gradual phase-out of Russian oil. It provided for a complete import ban on all Russian seaborne crude oil as of December 5, 2022, and petroleum products as of February 5, 2023.