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Iran, Ukraine ink deal to develop all-out economic ties

9 March 2016 15:41 (UTC+04:00)
Iran, Ukraine ink deal to develop all-out economic ties

By Aynur Karimova

Ukraine and Iran have reached an agreement to strengthen their cooperation in various sectors of economy, in particular in the energy sector; a move that Ukraine says will intensify relations in 2016.

The 28-page document, which was signed by Iran's Agriculture Minister Jihad Mahmoud Hojjati, and Ukraine's Deputy Prime Minister Gennadiy Zubko at the Fifth Tehran-Kyiv Joint Economic Commission, will see the two countries cooperate in the agriculture, investment, oil, gas, energy and banking sectors, Irna reported on March 7.

Ukraine indicated the signing of this document as a resumption of cooperation that was halted as a result of the international sanctions imposed on Iran.

"The joint commission is taking place today, after a long pause in the cooperation between our countries," Zubko said. "We view this as an opportunity to resume the dialogue on all relevant issues of mutually beneficial cooperation in the interests of the peoples of our countries."

After the signing ceremony, the two countries also discussed the ways to expand their cooperation in a number of energy-related areas.

Energy cooperation on focus

In view of sanctions-free Islamic Republic's intention to expand export of oil and oil products, Ukraine eyes diversification of import of oil products.

Given the mutual interest of the two countries in energy partnership, the issues such as the possibility of refining Iranian oil at the Ukrainian refineries, storing crude oil in the country and then diversification of supplies to the EU were high on the agenda of talks held in Tehran between the Ukrainian and Iranian top officials on March 7.

At a meeting with Zubko, Iran’s Oil Minister Bijan Namdar Zanganeh supported Ukraine’s presence in the Islamic Republic’s oil industry, saying the east European country can cooperate in manufacturing of turbines and gas compressors, IRNA reported.

He believes that the bilateral ties of Tehran and Kyiv in the oil industry, which date back to long time ago, can continue in the post-sanctions era.

He also noted that the Ukrainian companies need to totally finance the operation by the banks in their country for being successful in Iran’s oil industry projects.

"Iran has outlined numerous projects for investment by foreign companies, including those in the petrochemicals, as the sector needs $50 billion in investment for the coming years, which can partly be financed by foreign companies," Zanganeh added. “Oil and gas industry’s upstream sector is also in need of investment in the amount of $130 billion, which has to be supplied by the resources overseas, because we cannot provide from our current revenues."

After the removal of international sanctions from Iran in January 2016, the Islamic Republic has become one of the most promising destinations for foreign investors. For Ukraine, it is very important to be among the first to win a considerable share of the Iranian market.

Iran with the world’s second largest gas reserves and the fourth largest oil deposits, has already declared its readiness to re-enter the global oil and gas market. To realize this goal, Iran needs diversifying energy supply routes. Ukraine, which has energy refining and export infrastructure, could take a significant share on the Iranian market by meeting the needs of a post-sanctions Iran.

Also, Ukraine's potential to transit Iranian blue fuel to Europe, is the most important factor for Iran, which has been working to figure out ways to enter the European gas market.

Iran is also ready to provide the participation of Ukraine in various energy projects to improve the Islamic Republic’s electricity sector.

Hamid Chitchian, the Iranian Energy Minister, said at a meeting with Zubko and Ukrainian Energy and Coal Industry Minister of Vladimir Demchishin on March 8 that Ukraine and Iran can cooperate in the fields of renovation of steam power plants in Iran.

He believes that the two countries can also cooperate in building new steam power plants, as well as improving the voltage level of Iran’s high-voltage electricity network from 400 to 765 kilovolts.

"Iran can provide Ukraine with needed equipments in energy sector," Chitchian said adding that the Ukrainian companies can purchase required transformers with high quality from Iranian firms.

Iran's energy minister added that the two countries can also cooperate in financing energy projects, in particular converting Iran’s gas power plants into combined cycle plants.

He further expressed interest in participating in the privatization of Ukraine’s energy facilities, as Ukraine has opened access to them due to market reform.

Zubko, in turn, said that alongside with export of products and engineering services to Iran, Ukraine also gives great importance to strengthening economic cooperation with Tehran.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

Follow us on Twitter @AzerNewsAz

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