Thursday, May 27, 2010

FACTBOX-Russia's relations with Iran
(Reuters) - Iran and Russia clashed on Wednesday over Kremlin support for draft U.N. sanctions against the Islamic Republic, in one of the worst rows between the two powers since the Cold War.


Iran is Russia's biggest trading partner in the Middle East, though bilateral trade fell to $3 billion in 2009 -- or just 0.7 percent of Russia's external trade -- after reaching a record of $3.7 billion the year before.

Russian trade with Iran is about double Russia's trade with Israel and is dwarfed by the $236 billion annual trade with the European Union, Russia's biggest trading partner, or Russia's $39.5 billion annual trade with China.

The trade is also one way: Russian exports -- mostly ferrous metals, cars and arms -- make up 93 percent of last year's bilateral trade with Iran.

Analysts say the raw figures fail to show the true significance of projects such as Russia's deal to build Iran's first nuclear power station in Bushehr for about $1 billion.

A Russian deal to sell Iran S-300 surface to air missiles, which could protect Iran's nuclear facilities against possible air strikes, has been a major issue in relations with Israel.

Many diplomats and some Iranian officials say the S-300 deal and the long-delayed Bushehr plant, agreed under a 1995 contract, are used by Moscow as levers in relations with Tehran.


Russia is the world's biggest energy producer, holding over 23 percent of the world's gas and 6.3 percent of the world's oil. Iran holds 11 percent of the world's oil and 16 percent of the world's gas, the second biggest gas reserves.

Tehran and Moscow cooperate in a Russian-led group of gas powers which control nearly 70 percent of proven world reserves, though Russia has in the past reneged on pledges to OPEC -- of which Iran is a key member -- to limit oil exports.

Iran and Russia are natural competitors in gas pipeline politics and Moscow is keen to prevent Iran taking any of its lucrative gas sales to the European Union.

Iran has said it wants to supply the Nabucco pipeline, a long delayed project that is backed by the European Union as a way to curb dependency on Russia by pumping gas from the Caspian and the Middle East.

That would undermine the efforts of Russia's leaders, who have spent a decade garnering support for rival pipelines such as South Stream and Nord Stream.

Over the past year, Russian energy companies have distinctly cooled towards Iranian energy projects.

* LUKOIL (LKOH.MM) will cease gasoline sales to Iran, industry sources said on April 7. LUKOIL had supplied some 250,000 to 500,000 barrels of gasoline to Iran every other month, traders said. [ID:nLDE63606I]

* Caspian Sea producers will suspend oil swaps with Iran from June 1 after Tehran steeply raised fees on operations to avoid an oil glut following lower sales of its own crude, industry sources said on May 21. [ID:nLDE64K1GT]

* Russian gas giant, Gazprom (GAZP.MM) said in 2008 that it planned to work with Iran and Qatar to develop the world's biggest gas field in Iran's South Pars, which also borders Qatar. But it has said little about its plans recently.

* Gazprom Neft (SIBN.MM), Russia's fifth-largest oil producer, said last year it had signed a memorandum of understanding with the National Iranian Oil Co (NIOC) to study the development of two Iranian oilfields.


Though sometimes painted as Iran's main big-power partner, Russia is still regarded with deep distrust in Iran after the role the Tsarist and then Soviet empires played in helping foreign powers to dominate Persia.

The Soviet Union was reviled by Iran as an infidel Communist state during the Cold War, but ties warmed since 1991 and Russia view Iran as a growing -- if unpredictable -- regional power.

In June 2009 Moscow was happy to welcome Iranian President Mahmoud Ahmadinejad to a summit of BRIC nations in Siberia and congratulate him on his disputed re-election.

But Russia does not want a nuclear armed power along the southern shores of the Caspian Sea and Russia has expressed growing concern about Iran's secrecy about its nuclear programme.

Russian officials in private express frustration with Ahmadinejad's rhetoric and Tehran's erratic negotiating techniques.

Some diplomats say Moscow has skilfully used its supposed clout with Tehran to play a central role in negotiations on the Iranian nuclear programme and to push for concessions from the United States and European Union powers.

Before backing previous sanctions resolutions, Russian leaders have traded right up the Security Council vote. (Writing by Guy Faulconbridge)

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