SKU: 199632
Author: Wood Mackenzie

Insight 25 April 2025

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Report summary

Russia and Iran have signed a major gas supply agreement, signalling a potential realignment in regional energy flows. This analysis explores the details of the deal, which aims to scale up to 55 bcma. We examine the strategic motivations behind the partnership, highlighting how it addresses both countries’ evolving energy needs and market constraints. The report assesses the infrastructure required to support the deal, including current pipeline capacity and prospects for new developments. We provide an overview of the ongoing price negotiations and outline our assumptions for future gas prices. Finally, we explore the broader geopolitical consequences, including the potential impact on Azerbaijan’s role as a transit country and how the deal could expand Russia’s access to new gas markets.

Executive summary
Deal description
Redirecting Russian gas south: infrastructure, cost and pricing
Iran gas crisis: surging demand, shrinking exports, and reinjection strain
Russia’s gas surplus: stranded volumes in search of new markets
Track record of Russia–Iran cooperation in the energy sector