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Russia has agreed to purchase 100,000 barrels of oil a day from Iran in exchange for cash and goods and services, according to a new report by the Iranian Students News Agency.
The setup is set to begin within the next 15 days, the ISNA said.
The two countries also have a standing contract to build a 1.4 gigawatt thermal power plant in the southern city of Bandar Abbas. Sputnik News reported that construction at the site began on Monday during an opening ceremony with Russian Energy Minister Alexander Novak in attendance.
The project is led by the Russian firm Technopromexport, which finalized the deal with an Iranian holding company. The company is providing US$1.26 billion (1.2 billion euros) worth of funding to make the power plant a reality.
After Tehran saw severe international sanctions removed in January 2016, Iran and Russia have allied in several energy, industrial and infrastructure projects. In July, Russia and Iran signed a strategic five-year plan that focused on energy, construction, and trade.
In accordance with the plan, Iran has been giving Russia a priority position for investment: a $1 billion offshore rig contract was awarded to a Russian firm, and the construction of a new transport rail system called the North-South Transport Corridor (N.S.T.C.) connecting India, Iran, and Russia via Azerbaijan is also to be co-financed by Russia.
But competition between Tehran and Moscow in oil markets has been strong as well. Last August, reports spread that Poland had been plotting to replace Iran with Russia as its main fuel source, though traders had noted at the time that a shipment of two million barrels of Iranian crude was heading to the Polish port of Gdansk.
This month, for the first time in Belarus’ history, Minsk signed a contract with Iran to supply oil – a commodity Russia had been withholding from its former Soviet Republic due to a row regarding fuel prices.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…