Iran and Russia reach deal on electricity exchange worth $10 billion

Iran and Russia have been consistently dialoguing about potential deals for $10 billion worth of electricity, in addition to another set of deals to exchange food and other products for Iranian oil. Iranian Energy Minister Hamid Chitchian and Russian Energy Minister Alexander Novak met in Tehran on Sunday to discuss the deal, which included construction of hydroelectric power plants and the possibility of Russia exporting over 500 MW of power to Iran.

The move is seen by many as Moscow’s attempt to head off the opening of Iran’s economy, and its potential to be a hedge against disruptions from Russia’s energy market. Increased tensions with the West, particularly Europe, have created more urgency on Moscow’s part, hence the drive to exchange food for oil, and create power arrangements that will curtail incentives to open to Western oil and gas companies hungry to reduce dependence on Russian energy.

The Russian oil for food deal is projected to be worth some $20 billion, and it has rattled policymakers in Washington as it brings Iran’s crude exports above a one-million-barrels-a-day limit delineated in November.

News Briefs:

  • Ukraine separatists have seized control of a local TV headquarters in Donetsk, shouting slogans such as “Russia!” and “Referendum!” Citing support for a referendum on the entire country to be absorbed into Russia, separatists have been battling Ukrainian nationals for weeks following the invasion of Crimea.
  • The Afghanistan National Disaster Management Authority said that over 100 have died in heavy flooding in the Sari Pul, Zawzjan, Faryab and Badghis provinces, with over 20 still missing. Over 1,000 people have left their villages in the border regions after losing houses, crops, and livestock. The Afghan National Army has deployed helicopters for rescue operations and food drops.
  • Russian Foreign Minister Sergei Lavrov has reassured tense observers in Kazakhstan about its similarities to Ukraine. With burgeoning anti-government sentiment and protests, most at this point based around the government’s handling of its currency crisis, officials were looking for verification from Russia that they were not a target for intervention from Russia. Politicians such as Vladimir Zhirinovsky said that Kazakhstan should be reintegrated into Russia and Lavrov’s comments were designed to address those comments as not part of Russia’s official foreign policy.
  • Railroad officials from Iran, Uzbekistan, and Turkmenistan met in Tehran yesterday to continue ongoing negotiations on tariffs, capacity of rail transit, and volume of transit. Mohsen Pourseyed Aghaei, the managing director of the Iranian Railway Company (RAJA) added that the three countries have come to an agreement on a single rail tariff of 60%, a major step forward.
  • India has expressed interest in developing the Abai oilfield in the Kazakh section of the Caspian Sea, Tengrinews reports. Abai’s estimated reserves stand at 387 million tons, or 2.8 billion barrels of oil, and was originally set to be developed jointly by Norwegian Statoil and KazMunayGas. Statoil left the project and Saurabh Chandra, Vice Minister of Oil and Gas, discussed with Kazakh officials the possibility of developing the project for export to India.
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