Mon Feb 27, 2017 12:3PM
Russian oil products tanker Caspian Sprinter is seen sailing in the Taganrog port.
Russian oil products tanker Caspian Sprinter is seen sailing in the Taganrog port.

Energy Minister Alexander Novak says Russia is negotiating daily purchases of 100,000 barrels of crude oil from Iran. 

The two countries are currently discussing the terms of a potential agreement, Novak said, adding he expected the deal to be reached "within weeks."

Russia’s state trading enterprise Promsirieimport has been authorized by the government to carry out the purchase, he said on the sidelines of an economic forum in the Black Sea resort of Sochi.  

The announcement came after Novak visited Tehran last week, where Minister of Petroleum Bijan Zangeneh said Iran was ready to reach a deal on supplies of 100,000 barrels of crude oil per day to Russia within the next 10-15 days.

Russian Energy Minister Alexander Novak (R) and Iranian Minister of Petroleum Bijan Zangeneh hold talks in Tehran, Feb. 20, 2017. (Photo by Shana)

The two ministers discussed potential “oil-for-goods” swaps at their meeting, with Students' News Agency (ISNA) reporting that Iran sought to receive payment half in cash and half in goods and services.

Iran started oil swap in the Caspian Sea in 1997 and the arrangement was in place for more than 12 years.

Under the arrangement, Iran received crude from Azerbaijan, Kazakhstan and Turkmenistan in Neka for processing in its northern refineries and delivered an equivalent volume to the clients of those countries in the Persian Gulf.

The average daily swap was 90,000 barrels in 2009, which Iran planned to raise to 300,000 barrels per day by 2015.

Iran also charged the partners with a transit fee which totaled $880 million between 1997 and 2009, according to the local media. 

Caspian producers suspended oil swaps in June 2010 after Tehran raised fees on operations to avoid an oil glut following lower sales of its own crude.

The government of former president Mahmoud Ahmadinejad was basically opposed to Caspian oil swaps and Iran’s partners at the time accused Tehran of deliberately making the arrangement uneconomic.   

The collapse of the Soviet Union has given Iran an opportunity to position itself as a major transit route for the Caspian energy. However, plans for building a pipeline to take the region's oil and gas to the Persian Gulf have been shelved amid US opposition.

Iran has been ramping up crude oil production to win back its market share since sanctions were lifted on the country under a nuclear accord.

On Monday, South Korea said its imports of crude oil from Iran rose three-fold last year to 111.9 million barrels from 42.4 million barrels a year before.