Iran’s Oil Minister Bijan Zangeneh held a press conference in Tehran on Tuesday, providing insight into the thinking of the Islamic Republic’s O&G sector ahead of the potential easing of sanctions early next year.
He revealed that Iran has set aside nearly nothing for oil investment this year, reiterated Iran’s plans to unleash more oil into an already oversupplied global market, and updated development plans for the largest gas field in the world.
Iran Has Set Aside Almost Nothing For Oil Investment
Iran has set aside almost nothing for oil investments in 2015 due to the fall in oil prices. “Because of the drop in the price of oil, almost nothing has been set aside for investment in the oil industry this year,” Zanganeh said, according to state news agency Shana.
Zanganeh said that money invested in the industry fell from approximately $40 billion for 2011 and 2012 combined to $6 billion last year.
Iran’s state-run news agency IRNA said on August 3, citing Saeed Ghavampour, general manger of the oil industry’s strategic planning, that the country’s oil industry requires $100 billion to $500 billion of investment over the next five years.
Iran produced 3.6 M/bopd last year, down from 4.4 million in 2011, according to BP Plc data. The largest producer was the US at 11.6 million barrels a day, trailed by Saudi Arabia at 11.5 M/bpd, Russia at 10.8 M/bpod and China at 4.2 M/bpd.
On Monday, Iran expressed support for calls for an emergency OPEC meeting at the same time as it reiterated plans to increase its own production as soon as Western sanctions are rescinded.
1 MMbpd Of Iranian Oil Post-Sanctions
Iran reiterated its plans to increase oil production by 500,000 bpd as soon as sanctions are eased (possibly next spring), and an additional 500,000 bpd in the months thereafter, Oil Minister Bijan Zanganeh said Tuesday as reported by Shana.
“Iran will take back the market share of more than 1 million barrels per day that it lost,” he said.
He added, “The market must make room for Iranian oil barrels [after its return]…Every OPEC member supplies crude oil based on its production capacity and we must immediately raise our supply because if we put off our return to the market, we will have to beg others to buy every 10,000 barrels of our crude oil.”
Speaking to the ongoing discussions Iran is now holding with IOCs expressing interest in reentering the O&G sector post-sanctions, Zanganeh said, “We have told the visiting representatives of foreign companies that they should accept the new state of play in Iran.”
Iran’s Oil Minister Bijan Zanganeh
During a visit to Iran earlier this week, UK foreign secretary Philip Hammond said he expected sanctions on Iran’s oil sales (imposed in 2012) to be rescinded as early as next spring.
New Gas Projects In October
Zanganeh said Tuesday that the country intends to start operations at two new gas projects in October, after the country completes development of another portion of the world’s largest gas field, South Pars.
Iran and Qatar share the field: the former calls it South Pars and the latter calls it the North Field. It is situated along the Iran-Qatar Gulf border and represents almost half of all Qatar’s gas production and approximately 35% of Iran’s gas output.
Zanganeh said Tuesday, as reported by Shana, that development phases 15 and 16 of the South Pars field are close to commencing production and will be inaugurated by President Hassan Rouhani in October.
Shana reports that production capacity from the two phases is anticipated to reach 1.7 Bcf/d within a month. The phases will also yield production of 75,000 bpd of gas condensate.
Iran exports small quantities of its copious gas reserves to Turkey but has been unable to increase output sufficiently quickly to meet its domestic demand. Moreover, northern Iran heavily depends on gas imports from Turkmenistan, particularly for heating during the winter season.
Iran’s gas output more than doubled to 160.5 bcm by 2012 from 75 bcm in 2002.
Shana also reported that the engineering division of Iran’s Revolutionary Guard, Khatam al-Anbia, was awarded the tendering for phases 15 and 16 of South Pars in 2005.