Russia has committed to finance a new nuclear power plant in Iran as part of a sweeping energy agreement.

“Iran and Russia will continue their cooperation in the peaceful use of nuclear energy and the construction of new nuclear energy facilities and the completion of phases two and three of the Bushehr power plant using Moscow’s credit line,” Iranian Oil Minister Mohsen Paknejad said at Friday’s closing ceremony of the 18th Joint Economic Cooperation Commission in Moscow.

Russia previously helped build Iran’s first nuclear reactor at Bushehr in 2011 and will now finance additional phases of development along with a new facility. According to Iranian state media, initial gas deliveries could begin this year, with Tsivilev confirming Russia might supply 1.8 billion cubic meters to Iran in 2025, though pricing details remain under negotiation. Russian President Vladimir Putin previously indicated in January that supplies would start at lower volumes before potentially reaching a 55 billion cubic meter target annual.

Paknejad also announced Iran will sign a $4 billion agreement with Russian companies to develop seven Iranian oilfields, noting just “one or two issues remain” before finalizing gas import volumes. Future plans include potential gas swaps and transit arrangements to other countries.

Despite possessing the world’s second-largest gas reserves after Russia, Iran has struggled with underinvestment in its energy infrastructure, forcing it to import gas from neighboring countries like Turkmenistan. Russian gas giant Gazprom signed a memorandum last June with National Iranian Gas Company regarding pipeline gas supplies, though specific route details remain undisclosed.

“One of the areas of interest for both sides, in the first phase, is the import of gas from Russia, and in the second phase, the trade of gas through swap or transit to other countries,” Paknejad explained.

Due to Western sanctions, economic ties between Russia and Iran have strengthened considerably. Bilateral trade rose 16.2% in 2024 to $4.8 billion, with both governments expressing confidence trade could reach $6 billion with full implementation of existing agreements. Last week, Russia ratified a 20-year strategic partnership agreement with Tehran signed by Putin and Iranian President Masoud Pezeshkian in January.