Russia, Iran in talks on oil-for-goods contract

MOSCOW, Aug 7 (AFP):  Russia and Iran have agreed to discuss next month a contract for Tehran to export two per cent of its annual oil production in apparent circumvention of sanctions imposed over its nuclear drive.

The controversial deal is just a tenth of the size of that envisioned by the two close partners last year and appears to be aimed at shielding Russia from additional punitive steps imposed by the United States for violating international restrictions on the Islamic state.

"This format of cooperation does not violate our existing international obligations," Russian Energy Minister Alexander Novak said.

Russia's energy ministry said on Tuesday it had signed a memorandum of understanding with a visiting Iranian delegation that paves the way for contract talks to begin on September 9 in Tehran.

The five-year framework agreement covers "the construction and reconstruction of (Iranian power) generation capacities, electricity supply network infrastructure development, as well as

oil and gas," the ministry said in a statement.

It added that Russia was also hoping to supply Iran with automobiles and equipment and well as consumer and agricultural goods.

Russian and Western media reports late last year said the barter deal would see Iran export of up to 500,000 barrels of oil per day (25 million tonnes per year).

But Moscow's Kommersant daily cited sources saying the discussions now focused on Russia's purchase of about 70,000 barrels of oil per day -- a fraction of the 3.2 million barrels per day the US Energy Information Administration believes Iran produced last year.