Putin supports gas pipeline project to Iran

Russian President Vladimir Putin has expressed support for the construction of a gas pipeline to Iran that could supply up to 55 billion cubic meters of gas a year to the Islamic Republic. Speaking to reporters after talks with Iranian President Masoud Pezeshkian on January 17, Putin acknowledged challenges but said the project was progressing.

The pipeline project is part of a broader strategic agreement between Russia and Iran signed on January 17, as well as a memorandum of understanding signed by Russian state gas giant Gazprom and the National Iranian Gas Company in June 2024, to facilitate the supply of Russian gas to the Islamic Republic.

"There are always difficulties in coordination and pricing, technical issues… but the work is progressing. The project is being implemented," Russian President Putin said in response to a reporter's question about the pipeline.

"In terms of feasible supply volume, we believe that it is necessary to start from a small volume, about 2 billion cubic meters, but in the long term it can reach 55 billion cubic meters of gas per year."

The pipeline will pass through Azerbaijan, with the route already determined, Russian Energy Minister Sergey Tsivilev said on January 17. Speaking to reporters on January 17, he said Moscow and Tehran were currently finalizing details, such as pricing for future supplies.

“The volume has been approved. But pricing is always a commercial issue, a compromise needs to be found, so working groups have been set up on both sides, and experts are developing pricing methods,” he said.

Although Iran produces about 270 billion cubic meters of gas a year and has the world’s second-largest gas reserves after Russia, it faces a domestic energy shortage due to high consumption and underinvestment, partly due to US sanctions. With a population of about 89 million, Iran has one of the highest levels of domestic gas use in the world.

The pipeline project would fit into Tehran's plan to create an international gas hub in collaboration with Russia, Qatar and Turkmenistan, announced in 2023. Under the terms of the memorandum of understanding with Gazprom, Iran will be able to resell its excess gas imports to other countries, which is expected to bring the Islamic Republic around $10-12 billion a year.

At the press conference, Mr. Putin also emphasized the potential for cooperation with Iran in the energy sector beyond natural gas, mentioning "a possible area of ​​cooperation in the oil industry" and an ongoing project in the nuclear energy sector.