Russia strengthens energy ties with Iran

Russian gas giant Gazprom signed a memorandum of understanding this week with its Iranian counterpart, the National Iranian Gas Company (NIGC), on potential gas supplies from Russia. Cooperation between the countries in the oil sector is also set to strengthen, with Russian companies expressing interest in investing in Iranian oil fields.

Russia is strengthening its ties with Iran. To this end, Gazprom CEO Alexey Miller visited Tehran and met with Iranian Oil Minister Javad Owji. It was already his second visit this year. According to a Gazprom statement, the talks focused on prioritising steps that will lead to the implementation of the newly signed memorandum and the development of further cooperation.

"The parties continue to develop long-term and mutually beneficial cooperation," Russian news agency Interfax quoted Gazprom as saying.

At the same time, Russian President Vladimir Putin met with Chinese state representatives. Analysts interpret Miller's absence from these talks as a sign that reaching an agreement between Russia and China on gas supplies through the planned Power of Siberia 2 pipeline is not currently on the agenda.

China is seeking to make the most of the current geopolitical situation and is demanding a substantial discount on gas supplies through the planned pipeline, while also resisting a commitment to take volumes corresponding to its planned transport capacity.

Although gas supplies from Russia to China are growing significantly in percentage terms, in absolute terms Gazprom will not be able to replace the volumes it once supplied to Europe in the foreseeable future. Last year, Gazprom's pipeline exports to Europe fell by 55.6% compared with 2022. The result is Gazprom's first financial loss in the past 23 years.