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Tue 14 Apr 2015 12:32 PM

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Russia signs oil-for-goods barter deal with Iran worth nearly $20bn

President Vladimir Putin also signed a decree ending a self-imposed ban on delivering the S-300 anti-missile rocket system to Tehran

Russia signs oil-for-goods barter deal with Iran worth nearly $20bn
Defence

Russia paved
the way on Monday for missile system deliveries to Iran and started an
oil-for-goods swap, signalling that Moscow may have a head-start in the race to
benefit from an eventual lifting of sanctions on Tehran.

The moves come
after world powers, including Russia, reached an interim deal with Iran this
month on curbing its nuclear programme.

The Kremlin
said President Vladimir Putin signed a decree ending a self-imposed ban on
delivering the S-300 anti-missile rocket system to Iran, removing a major
irritant between the two countries after Moscow cancelled a corresponding
contract in 2010 under pressure from the West.

A senior
government official said separately that Russia has started supplying grain,
equipment and construction materials to Iran in exchange for crude oil under a
barter deal.

Sources told
Reuters more than a year ago that a deal worth up to $20 billion was being
discussed and would involve Russia buying up to 500,000 barrels of Iranian oil
a day.

Officials from
the two countries have issued contradictory statements since then on whether a
deal has been signed, but Russian Deputy Foreign Minister Sergei Ryabkov said
on Monday one was already being implemented.

"I wanted
to draw your attention to the rolling out of the oil-for-goods deal, which is
on a very significant scale," Ryabkov told a briefing with members of the
upper house of parliament on the talks with Iran.

"In
exchange for Iranian crude oil supplies, we are delivering certain products.
This is not banned or limited under the current sanctions regime."

He declined to
give further details. Russia's Agriculture Ministry declined comment and the
Energy Ministry did not respond to a request for comment. There was no comment
from Iran.

Iran is the
third-largest buyer of Russian wheat, and Moscow and Tehran have been
discussing the oil-for-goods barter deal for more than a year.

Russia hopes to
reap economic and trade benefits if a final deal is concluded to build on the
framework agreement reached in the Swiss city of Lausanne between Iran and
Russia, the United States, France, Britain, Germany and China.

They have until
June 30 to work out a detailed technical agreement under which Iran would curb
its nuclear programme and allow international control in exchange for a lifting
of economic sanctions.

US Secretary of
State John Kerry on Monday raised concerns about the missile system sale with
Russian Foreign Minister Sergei Lavrov, State Department spokeswoman Marie Harf
said.

She said,
however, that US officials do not think Russia's actions will hurt unity
between the major powers in the nuclear talks.

Lavrov said the
agreement in Lausanne wiped out the need for Moscow's ban on the delivery of
S-300 and that the system was defensive, hence would pose no threat to Iran's
foe, Israel.

"As a
result of suspending the contract, we did not receive major sums that we were
due. We see no need to continue doing this given progress in talks on Iran's
nuclear programme and the absolutely legitimate nature of the forthcoming
deal," he said.

The United
States and Israel had lobbied Russia to block the missile sale before it did so
in 2010, saying the S-300 system could be used to shield Iran's nuclear
facilities from possible future air strikes.

Leonid Ivashov,
a retired Russian general who now heads the Moscow-based Centre for
Geo-Political Analysis think-tank, said the move was part of a race for future
contracts in Iran.

"If we now
delay and leave Iran waiting, then tomorrow, when sanctions are fully lifted,
Washington and its allies will get Iran's large market," RIA news agency
quoted him as saying.

Ryabkov
suggested Russia had high hopes that its steady support for Iran would pay off
in energy cooperation once international sanctions against Tehran are lifted.

"It takes
two to tango. We are ready to provide our services and I am sure they will be
pretty advantageous compared to other countries," he said. "We never
gave up on Iran in a difficult situation ... Both for oil and gas, I think the
prospects for our cooperation should not be underestimated."

He also
reiterated Moscow's view that an arms embargo on Iran should be lifted once a
final nuclear deal is sealed.

Sanctions have
cut Iran's oil exports to about 1.1 million barrels per day from 2.5 million
bpd in 2012. Analysts say Iran is unlikely to see a major boost in exports
before next year.

One upper house
lawmaker asked Ryabkov whether lifting sanctions on Tehran could undermine
Russia's position on global energy markets, including as the main gas supplier
to Europe.

"I am not
confident as yet that the Iranian side would be ready to carry out supplies of
natural gas from its fields quickly and in large quantities to Europe. This
requires infrastructure that is difficult to build," he said.

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