Russia’s Gazprom Announces Natural Gas Supply Deal With Iran

Gazprom has signed an agreement to look into the possibility of supplying Russian gas to Iran, Russia’s gas giant said on Wednesday.

Gazprom and the National Iranian Gas Company (NIGC) signed the memorandum of understanding during a visit of Gazprom executives to Tehran.

“The parties proceed from developing long-term mutually beneficial cooperation going forward,” Russian news agency Interfax quoted Gazprom as saying in a statement.

During the visit, Gazprom’s chief executive officer Alexey Miller met with Iranian Oil Minister Javad Owji for a working meeting and discussed priority steps to implement the memorandum, as well as other areas of collaboration in the energy sector, Gazprom said.

This week marks the second visit of top Gazprom’s managers to Iran this year. In May, Miller visited Iran for a “working visit with high-level Iranian officials, including the country’s oil minister.”

Gazprom’s top executive visited Iran at the same time that Russian President Vladimir Putin was visiting China for high-level talks. Miller’s absence from the Chinese visit was interpreted as yet another sign that Russia and Gazprom are not close to sealing a deal with China for a second pipeline to supply Russian gas, the Power of Siberia 2.

Gazprom, meanwhile, having lost most of the European market, is looking to pivot its sales to Russia’s “friendly” countries, which include China and Iran.

Before the war in Ukraine, Russia supplied around one-third of all the gas to Europe.

Last year, Gazprom’s pipeline gas exports to Europe slumped by 55.6% compared to 2022.

As a result, Gazprom booked its first annual net loss in 23 years, signaling a significant shift in financial performance attributed to dwindling gas shipments to Europe and pricing pressures.

Putin’s invasion of Ukraine has badly hurt the gas sales and market share of Gazprom, which may not recover lost sales volumes and revenues for more than a decade, or ever, according to a third-party report commissioned by Gazprom’s executives and reported by the Financial Times earlier this month.

By Charles Kennedy for Oilprice.com

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