OPEC Output Cuts Cloud Iran Outlook

EghtesadOnline: Iran's oil minister said on Monday the country's crude oil output is notably below the levels it should be, but acknowledged that OPEC-led efforts to cut supplies and ease a persistent oversupply may undercut Iran's production plans in the long run.

News ID: ۷۷۸۸۸۶

30 August 2017

"Our production is by no means in proportion to our reserves … We are currently producing over 3.8 million barrels per day while we exported over 2.6 million barrels of oil and gas condensates daily in the previous [Iranian] month," Zanganeh said on the national television Monday night, IRNA reported.

Iran holds an estimated 158 billion barrels of crude oil in place, estimates by the Organization of Petroleum Exporting Countries and the US Energy Information Administration show.

That is the world's fourth-largest reserves after Venezuela, Saudi Arabia and Canada, and the third biggest among OPEC producers, Financial Tribune reported.

Zanganeh said the country's Sixth Five-Year Development Plan (2017-22) has stipulated oil production to reach 4.8 million barrels per day, though actual output may fall short of the self-imposed target.

"This [4.8 million bpd] is the envisaged production capacity, but actual production could be lower than that amount because of commitments to OPEC and other issues," Zanganeh said.

OPEC and 11 other producers, including Russia, have committed to cutting back production by 1.8 million barrels daily through March 2018. The initiative, which has helped prices stabilize in a $45-55 per barrel range for much of the year, requires Iran to pump no more than 3.8 million barrels daily by the end of the supply cut deal that could be extended further into 2018.

Venezuela, for one, is definitive proof that an ocean of reserves would not automatically elevate an oil-rich nation to top producer.

The beleaguered South American economy, which is grappling with a pressing cash crunch, sits on 300 billion barrels of oil but produces just shy of 2 million barrels a day, its lowest levels in nearly 30 years.

A BP statistical report published this year ranks Venezuela as the world's 12th biggest petroleum producer.

--- New Deals

Zanganeh wants to make sure that Tehran is moving in the opposite direction. The veteran minister, who is serving his second four-year term under President Hassan Rouhani's administration, played a pivotal role in signing a gas deal with France's Total, Iran's first major energy deal after last year's lifting of sanctions. He is all but certain that more deals will follow.

"We are in negotiations with 10-12 foreign companies" on developing oil and gas fields, Zanganeh said.

Iran's top-priority fields include Azadegan, Yadavaran and Yaran in the southern Khuzestan Province and at the border with Iraq, as well as Azar, Changuleh and Dehloran in the western Ilam Province.

The Oil Ministry is also in talks to develop the offshore Farzad-A and Farzad-B gas fields as well as Salman and Esfandiar oilfield in the Persian Gulf. Tehran says it hopes to raise $200 billion in its petroleum and petrochemical industries in five years.

Zanganeh recently said Iran's first oil tender within the framework of Iran Petroleum Contract, the country's new model of contracts for oil and gas projects, would be completed in eight months, singling out Azadegan as the first of several dozen fields to be tendered.