China and Russia back Iran
The enemy of my enemy is my friend is an ancient proverb which suggests that two opposing parties can or should work together against a common enemy.
Moscow and Tehran are expanding economic cooperation, with Russia planning multi-billion dollar investments in Iran’s energy sector. The move comes as major Western firms are pulling out of Iran amid the threat of US sanctions.
“Russia is ready to invest $50 billion in Iran’s oil and gas sectors,” Senior Adviser for International Affairs of the Supreme Leader of the Islamic Republic Ali Akbar Velayati was cited as saying by the Financial Times.
Velayati met with Russian President Vladimir Putin last week in Moscow. The sides focused on Russian-Iranian cooperation as well as the situation in the region. According to the Kremlin, they reaffirmed their commitment to the Joint Comprehensive Plan of Action on Iran’s Nuclear Deal (JCPOA).
An unnamed official from the Russian government confirmed Russia’s $50-billion investment plans to the Financial Times. A Russian oil company has signed an agreement with Iran worth $4 billion, Velayati said, without specifying the name of the company. He added that the deal “will be implemented soon.”
Russian energy giants Rosneft and Gazprom are also in talks with the oil ministry of Iran to potentially sign deals worth up to $10 billion, according to an Iranian official. Earlier this year, an agreement was inked by a local Iranian company, Dana Energy, in a consortium led by Russia’s Zarubezhneft, with the National Iranian Oil Company (NIOC). They seek to redevelop the Aban and West Paydar oilfields, with a total capital expenditure estimated at around $740 million.
Russia’s Energy Minister Alexander Novak said on Friday that Moscow was studying all legal implications of a possible deal with Tehran, under which Russia would provide goods to Iran in exchange for oil.
Meanwhile, the European Union fears that billions of dollars’ worth of trade could be jeopardized as a result of Washington’s new sanctions on Iran. The bloc has asked Washington to grant exemptions to European companies but the US has rejected the appeal, saying exemptions would be made only if they benefited US national security.
Dongming Petrochemical, an independent Chinese refiner, said it has halted crude purchases from the US and turned to Iranian imports amid escalating trade tensions between Beijing and Washington.
Dongming Petrochemical has nearly 6,300 employees, total assets of 30 billion yuan ($4.5 billion) and the primary processing capacity is 15 million tons per year, according to the company website.
Chinese authorities are reportedly planning to impose tariffs on US crude imports and replace them with oil from West Africa and the Middle East, including Iran. Beijing said it was not going to fall into line with US sanctions banning business with the Islamic republic.
China is America’s second-biggest crude-oil customer with exports reportedly totaling 400,000 barrels a day at the beginning of July. However, in response to the latest US tariffs on Chinese goods, Beijing slapped American crude imports with a 25-percent levy.
US tariffs of 25 percent on $34 billion of Chinese imports took effect on July 6. The Chinese government retaliated with duties on the same value of US imports, ranging from soybeans to cars, and has vowed to respond proportionately to any new US tariffs.
Shortly after that, President Donald Trump said the US could impose tariffs on more than $500 billion worth of Chinese goods, while his administration has prepared a new $200 billion list of Chinese products that could be levied with 10-percent tariffs.