Oil strengthens alliance between Russia and Iran. 50 billion in investments from Moscow

Kremlin sees "energy" is the "most promising" collaboration sector with the Islamic Republic. Russian Minister: projects ready for the exploitation of 10 subsoil deposits. IMF: exports to Iran reach 110 billion, up 16%. The increase in the dollar against the local currency is worrying, a fixed exchange rate is introduced.

Teheran (AsiaNews) - Cooperation between Iran and Russia is strengthening in the energy sector, and Moscow is ready to put an investment plan into action for oil and natural gas exploitation in the next few years for a total value of over 50 billion dollars.

 A Kremlin source reveals that "energy is the most promising sphere of cooperation" between the two nations; in fact, Russian giants Gazprom, Gazprom Neft, Rosneft, Lukoil, Zarubezhneft and Tatneft have already started "systematic collaborations" in Iran for the exploitation of deposits.

Just last month Teheran signed its second post-sanction oil contract with the Zarubezhneft; the goal is to restart the exploitation of the oil wells of Aban and West Paydar in the west of the country.

Iranian oil minister Bijan Zangeneh reports that this was the first agreement with a Moscow company; Russian Energy Minister Alexander Novak adds that plans to exploit at least 10 oil fields in Iranian subsoil are ready.

To date, the Islamic Republic and the Kremlin have signed six provisional agreements aimed at collaboration in the "strategic" energy sector, for a total of 30 billion dollars. The signature dates back to the visit of President Vladimir Putin to Teheran last November. Moscow wants to expand its sphere of influence in the Middle East, at the economic and military level, as also emerges in the context of the Syrian conflict. Furthermore, Russians and Iranians have a mutual interest in strengthening relations to counter Western bloc sanctions.

Russia and Iran are also collaborating on the definition of agreements for the exchange of goods with oil. A plan with a total value of over 20 billion dollars, the details of which have yet to be finalized by the representatives of the two parties.

Tehran officials recall that more than $ 200 billion is needed by 2021 to fund surface and underground projects in the oil sector. So far, the most valuable contract signed since the end of the sanctions came in 2016 with the signing of the French giant Total for a South Pars field renewal plan to the tune of  USD 4.8 billion.

If the sector of crude oil and natural gas continues to attract the attention of foreign investors, that of non-oil products is lower than expected. According to data provided by Mojtaba Khosrowtaj, president of the Iranian agency for the promotion of trade, between March 2017 and March 2018 growth stood at around 6.5%. A fact that, although positive, has not met government targets.

In fact, against a growth target for the year just ended [according to the Persian calendar] of 53 billion dollars, the final figure was 47 billion, six less than expected. It should also be noted that this sector also includes some products actually linked to the oil sector such as ultra-light crude.

A report by the International Monetary Fund (IMF) shows that the overall figure for Iranian exports [joining the various sectors, oil and non-oil sectors] is around 110 billion dollars, with an increase of about 14 billion dollars (16%) compared to the previous year. A further confirmation of the validity of the nuclear agreement (the JCPOA) and the consequent loosening of the western sanctions, decisive for the revival of the local economy.

In the same period the figure for imports is set at 91 billion dollars, with a growth of 15% compared to the previous year. The economic surplus of the trade balance is therefore of 18 billion with an even more favorable forecast for the next year: according to the IMF, exports will touch 130 billion, with a surplus of 27 billion. Also in this case, the petroleum sector is decisive with an expected increase in exports of 200 thousand barrels a day, for a total of 2.7 million.

In the face of positive economic indicators, structural problems such as high unemployment, inflation and an insufficient growth rate remain. The sudden increase in the value of the dollar compared to the local currency does not help either, caused also and above all by the fear that US President Donald Trump will cancel the nuclear agreement and introduce new sanctions.

In the last two weeks the rial has lost 20% against the dollar and the risk is the internal depreciation of assets. In an attempt to stem the collapse, Teheran decided to impose a fixed exchange rate against the US currency (42 thousand rials for a dollar). "We do not recognize any other rate - said the first Iranian vice-president, Eshaq Jahangiri - and anyone who trades with another tariff will be considered a smuggler".

• iran
• russia
• currency
• poverty
• development
• sanctions
• economy
• oil
• exports
• devaluation
• rial