Iran and Russia have announced a preliminary agreement for Moscow to supply Tehran with 55 billion cubic meters (bcm) of natural gas annually and to finance the construction of a new nuclear power plant in Iran. The deal was disclosed during Iranian Oil Minister Mohsen Paknejad's visit to Moscow, where he met with Russian Energy Minister Sergei Tsivilev.

This agreement underscores the strengthening strategic partnership between Iran and Russia, particularly as both nations navigate the challenges posed by Western sanctions and shifting global energy markets.

Details of the Agreement

Under the terms of the preliminary agreement, Russia will supply Iran with 55 bcm of natural gas each year. Initial deliveries may commence with up to 2 bcm this year, with pricing details still under negotiation. Additionally, Russia has committed to financing the construction of a new nuclear power plant in Iran through a dedicated credit line.

Despite possessing the world's second-largest natural gas reserves, Iran continues to import gas due to underinvestment resulting from U.S. sanctions. This agreement aims to address Iran's domestic energy needs and enhance its energy security.

Background and Context

Iran and Russia have been deepening their energy cooperation in recent years. In June 2024, Gazprom and the National Iranian Gas Company (NIGC) signed a Strategic Memorandum to explore pipeline supplies of Russian natural gas to Iran. In January 2025, Russian President Vladimir Putin and Iranian President Masoud Pezeshkian signed a 20-year Comprehensive Strategic Partnership Treaty in Moscow, encompassing cooperation in trade, military, science, education, and culture.

Since its full-scale invasion of Ukraine in 2022, Russia has experienced a significant decline in its European gas market share. In response, Russia has been seeking to diversify its gas export markets, with Iran emerging as a key partner in this strategy.

Implications of the Agreement

The agreement is poised to enhance Iran's energy security by diversifying its gas import sources and addressing domestic energy needs. For Russia, the deal provides a new market for its gas exports, potentially offsetting losses from reduced European demand. The strengthened Iran-Russia partnership may also influence regional geopolitics, potentially affecting relationships with neighboring countries and altering energy trade patterns.

Both Iran and Russia are subject to Western sanctions, which have impacted their economies and international relations. This agreement signifies a mutual effort to circumvent these sanctions and bolster bilateral cooperation.

Conclusion

The preliminary agreement between Iran and Russia for substantial natural gas supply and nuclear power plant financing represents a significant development in their bilateral relations. It underscores their strategic partnership and mutual efforts to navigate the challenges posed by international sanctions, with potential far-reaching implications for regional and global energy dynamics.