Iran, Russia find win-win strategy to get their oil to Europe

Business Materials 15 February 2016 17:26 (UTC +04:00)

Baku, Azerbaijan, Feb. 15

By Umid Niayesh - Trend:

Iran and Russia are stepping into new strategic oil cooperation in the market, said Mehrdad Emadi, consultant at the U.K.-based Betamatrix International Consultancy, commenting on Lukoil's purchase of Iran's oil.

Recently, Lukoil has purchased crude oil from Iran to supply its refinery in Romania. On Feb. 14, three oil tankers including one of Lukoil, sailed from Iran's Kharg Island to Europe.

As Emadi told Trend, considering the latest restrictions imposed on Russia by the EU, Moscow has to face new challenges in selling energy derivatives.

"Furthermore, because of sanctions, refineries which have been sourcing their crude from Lukoil or Rosneft, are facing legal issues when they try to supply the refined output to EU member countries," Emadi said.

"Now that the sanctions on Iran have been lifted, with the approval of Russian oil companies, these European refineries find Iranians both willing and able to fill the gap left by the reduced supply from Russia," Emadi explained.

In a larger context, this is a win-win situation for Iran and Russia, given the tightening of the restrictions on Russia, according to the expert.

"Russian oil companies can continue business arrangements with European refineries and hence avoid being displaced by the competitors from Saudi Arabia, Kuwait and Iraq," said Emadi. "And as for the Iranian side, it is very keen to increase its presence in Europe and this allows it to achieve this objective with a smaller cost."

He further said that in the longer term, it seems that Iran is aligning its oil and gas strategy more closely with Russian energy companies.

According to Emadi, the deepening of split in OPEC between Saudi Arabia and its tactical allies - who are flooding the market and have inflicted immeasurable harm on the interest of oil exporting countries - and Russia and Iran, who perceive oil as a commodity with strategic values beyond its pricing significance, has resulted in new forms of cooperation between Russia and Iran.

"This is one of the many indications which we will see in the next 18 months," he underlined.