Russia offers Iran gas at a 75% discount: what is known about the long-term contract

Russia is offering Iran record volumes of gas at a 75% discount, which will be about $100 per thousand cubic meters, much cheaper than for other Gazprom customers. However, experts doubt the reality of this deal due to political restrictions.

Russia and Iran are discussing the possibility of concluding a long-term contract for the supply of pipeline gas.

Iran's Energy Minister Javad Ouji said that the deal would involve the purchase of 300 million cubic meters of gas per day from Gazprom. This deal could cost Tehran $10-12 billion a year, which means a price of about $100 per thousand cubic meters of gas. This level is the lowest among all Gazprom's non-CIS customers.

Compared to Europe and Turkey, which are the main export markets for Gazprom, the discount for Iran is 75%, as the average price of gas for these markets is $400 per thousand cubic meters. Even compared to China, which buys gas for $260 per thousand cubic meters through the Power of Siberia pipeline, the price for Iran will be 62% lower. Thus, Iran receives a price equal to that paid by the CIS countries.

According to Ouji, the volume of supplies could make Tehran Russia's largest gas customer. Last year, Gazprom sold only 69 billion cubic meters of gas to non-CIS countries, the lowest volume since 1985. The Iranian contract, under which 110 billion cubic meters a year can be supplied, is all the "extra" gas Gazprom has. The disconnection of supplies to Europe has left the company with about 100 billion cubic meters of excess production capacity.

Gazprom is now desperately looking for new customers, as last year the company suffered a record net loss of 629 billion rubles and was forced to cut production to the lowest level in its history. Negotiations with China on the construction of the Power of Siberia 2 gas pipeline failed as Beijing offered to buy gas at domestic Russian prices, which would make the supplies unprofitable for Gazprom.

According to oil and gas expert Mikhail Krutikhin, a deal with Iran, which would require laying a multi-line pipeline under the Caspian Sea, cannot be taken seriously. Iran itself is one of the world's leaders in terms of proven gas reserves and does not need Russian gas in such volumes. Re-exporting Russian gas is also unlikely to be possible due to sanctions and legislative restrictions on Iran.

As OBOZ.UA previously reported, the expiration of the contract for the supply of Russian gas to the EU through Ukraine on December 31, 2024, opens up challenges for Europe in terms of energy security and the search for alternative supply routes. European countries are considering options for signing new contracts with Gazprom or increasing gas supplies from Azerbaijan through the Trans-Anatolian gas pipeline.

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