Make me your Homepage
left corner left corner
China Daily Website

Teheran, Moscow negotiating big oil-for-goods deal

Updated: 2014-01-11 07:25
By Jonathan Saul and Parisa Hafezi in London and Ankara ( China Daily)

Iran and Russia are negotiating an oil-for-goods swap that would let Iran increase oil exports substantially, in defiance of the West's sanctions that helped force Teheran to agree to a preliminary deal to end its nuclear program.

Three Russian and Iranian sources close to the negotiations said final details were being worked out in discussions of a barter arrangement under which Moscow would buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.

"Good progress is being made at the moment with strong chances of success," said a Russian source. "We are discussing the details, and the date of signing a deal depends on those details."

It is not clear whether the deal would be implemented before the details of November's nuclear agreement in Geneva between Iran and six world powers, including Russia, are finalized.

Technical talks between Iran and the European Union on the nuclear deal started on Thursday. The November Geneva deal was designed to halt Iran's nuclear advances for six months to buy time for a final settlement by May.

US and European sanctions have cut Iran's oil exports by more than half over the past 18 months to about 1 million barrels a day. Russia has no sanctions on Iran.

Russian purchases of Iranian crude would lift Iran's oil exports by 50 percent and inject a major energizing element into its struggling economy. With current oil prices near $100 a barrel, Iran would earn an additional $1.5 billion a month.

No details were available about the equipment and goods offered by Russia in exchange.

Given that Russia is a major oil and gas exporter, the Iranian oil would likely be exported from Iran on Russia's account, with Russian goods and equipment bartered in exchange. Most Iranian oil currently goes to Asia.

Iran's biggest oil buyer is China, importing about 420,000 barrels per day in 2013.

Other major Asian buyers, including Japan, South Korea and India, have cut purchases sharply under pressure from Washington. Turkey and South Africa also have reduced or eliminated imports.