As talk of a potential oil swap deal between Russian and Iran allegedly pick up pace, mainstream media reports say that Russia is considering the construction of a second nuclear reactor at Iran’s Bushehr nuclear plant in exchange for Iranian oil.
On Monday this week, Iranian ambassador to Moscow Mehdi Sanaei said the two countries had been negotiating over the delivery of hundreds of thousands of barrels of oil per day from Iran, though Russian officials have not confirmed this.
Moscow has emphasized that it will not do anything to violate existing UN sanctions in Iran.
The current Bushehr reactor was built by Russia and reached full capacity last year. “Iran could use some of the proceeds to pay for the construction by Russia companies of a second unit at the nuclear power plant in Bushehr,” Sanaei was quoted as saying in Moscow.
Russia could also supply Iran with trucks, railroad tracks, mini-refineries or other goods to pay for the oil, according to the ambassador.
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In January, reports first emerged that Iran and Russia were in talks about a potential $1.5 billion oil-for-goods swap that could boost Iranian oil exports, prompting harsh responses from Washington, which says such a deal could trigger new US sanctions.
So far, talks are progressing to the point that Russia could purchase up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods, according to Reuters. Such a deal would boost Iran’s oil exports by 50% and infuse the struggling economy with some $1.5 billion a month, according to some.
Since sanctions were slapped on Iran in July 2012, exports have fallen by half and Iran is losing up to $5 billion per month in revenues.
A nuclear agreement reached in November with Iran and world powers is in the process of being finalized, and the news of the potential Russian-Iranian oil swap deal plays to the hands of Iran hawks in Washington who are keen to see the November agreement collapse.
The November agreement is a six-month deal to lift some trade sanctions if Tehran curtailed its nuclear program. Under the terms of the tentative November nuclear agreement, Iran will be allowed to export only 1 million barrels of oil per day.
By James Burgess of Oilprice.com