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Russia/Iran: Russia Continues Trade With Iran

Moscow, 19 May 1997 (RFE/RL) - Russia continues to buck the trend, and defy U.S. pressure to cut back on trade with Iran. A Moscow ceremony last week publicized a small oil-pipe supply contract to press its point.

The Volzhsky Pipe Works (VTZ) and the Kala Naft Company of Iran called a press conference in Moscow to publicize details of an agreement between the Russian and Iranian pipe firms.

The deal itself was done in January, and was so small it attracted almost no attention. Since then, however, public pressure has been building in western Europe and the U.S. to toughen trade sanctions against the government in Teheran. Russian policy has been to resist, and to publicize improving relations with Iran.

The speaker of Iran's majlis, and likely successor to the presidency, Ali Akbar Nateq-Nouri, was feted in Moscow by President Boris Yeltsin a month ago.

The Kala Naft Company is a subdivision of Iran's oil ministry, and the only company purchasing pipes for the Iranian oil industry. According to the contract, worth nearly $6 million, the Russian VTZ company will ship 12 000 tons of pipes to Iran. The head of Kala Naft's Moscow office, Mohammed Morovati, explained that "cooperation with VTZ is preferable to the Iranian side, because the quality of VTZ pipes is up to European and American standards, and shipments from Volzhsky to Iran by sea are cheaper and more convenient, than the European supplies."

VTZ General Director Vitaly Sadykov announced he is negotiating a second Iran supply contract worth ten-million dollars.

VTZ, which is located in the small southern town of Volzhsky, near the Caspian Sea, lost out when the Soviet Union collapsed, and the vast Tenghiz oil field of Kazakhstan passed into new, non-Russian hands. The Soviet plan called for VTZ to supply pipes to the Tenghiz project.

VTZ's position went from bad to worse in the domestic Russian market, but there are signs of a pick up recently. A contract is now in the talking stage with Gazprom, VTZ's Sadykov said, for the supply of 36 000 tons of pipes. Until now, Ukraine was the sole supplier of pipes to Gazprom, as part of the arrangement to cover its debts for gas deliveries.

VTZ is owned by the Rosprom group, controlled by Menatep Bank and the Yukos oil company. Last year, VTZ ranked last on the table of major Russian pipe makers, and production fell catastrophically by 44 percent. The plant was virtually shut down between May and November. Integration into the Rosprom group has provided cash flow, new management, and improved marketing to stimulate recovery.

Kuwait, Saudi Arabia, and India are other export destinations for VTZ products. Sadykov told RFE/RL he expects total export earnings this year to reach $ 62 million.

The Iranians have signaled their appreciation of Russia's stance against limiting trade. "The policy of our country," Morovati said, "takes into consideration the fact that Russia is our neighbor, and we should cooperate with it. The contract with VTZ is our first step in Russia. Besides that, we are looking forward to buying our equipment (in Russia), not only in western Europe."