The National Iranian South Oil Company is ready to double crude production capacity in the shortest possible time after the US sanctions are removed, the company's director of integrated planning said.
“The state-run firm is presently producing an average of 1.5 million barrels per day of crude oil, which can reach 3 million bpd in less than a week,” Majid Arsham was also quoted as saying by ISNA.
NISOC is capable of increasing production by 300,000 bpd as soon as sanctions are lifted, he added.
The potential return of Iranian barrels into global oil markets - both from the volumes in floating storage and over the longer term – will affect futures prices.
NISOC, the largest subsidiary of the National Iranian Oil Company, is responsible for the development of 28 oilfields in the southern and southwestern oil-rich regions.
Despite decades of sanctions and limited investment, Iran remains one of the 10 largest oil producers in the world, ranking eighth after the US, Saudi Arabia, Russia, Canada, Iraq, China and the UAE.
The focus of the new round of negotiations is the revival of a multinational accord that limited Iran’s nuclear program in exchange for the lifting of related sanctions, including on oil flows. The original deal collapsed after then-president Donald Trump abandoned it.
Last week, the US sent its response to the latest proposal, boosting speculation that an agreement may soon be struck, although Tehran said on Sunday that exchanges will now drag on into September.
Iran sits on the world’s fourth-largest proven oil reserves after Venezuela, Saudi Arabia and Canada. It also accounts for 17% of global gas reserves and ranks second after Russia.
Daily Shipment
Since Trump stopped granting waivers to import Iranian oil following American sanctions, Iran’s daily shipments have held at about 1 million barrels, according to Emma Li, an analyst at Vortexa.
China has remained among the top buyers, as other nations backed away.
In 2017 and 2018, Europe consumed an average of 748,000 barrels and 528,000 barrels a day of Iranian oil, respectively, while Asia took 1.2 million and close to 1 million barrels a day, ship-tracking firm Kpler data showed.
“Operations to equip and repair old wells, in addition to drilling new wells, are carried out as planned in collaboration with domestic startups,” Arsham added.
The market is desperately looking for Iranian oil as it braces for a major supply shock caused by the Ukraine conflict, namely the loss of a huge amount of Russian oil exports.
According to Kpler, progress toward an Iranian nuclear deal has thrown the spotlight onto a sizable cache of crude held by Tehran that could be swiftly dispatched to buyers in the event an agreement is hammered out.
About 90 million barrels of Iranian crude and condensate are currently stored on vessels in the Persian Gulf, off Singapore and near China, Kpler data show.
The possible full re-admittance of Iran to the global crude market, with the potential lifting of US sanctions, comes at complex moment for oil traders. Investors are juggling the countdown toward far tighter European Union curbs on Russian crude flows from December as part of the bloc’s pushback against the war in Ukraine.
In addition, the US administration’s mammoth sale from the Strategic Petroleum Reserve will end in October.
NISOC official stressed that in spite of the US sanctions, Iran has continued development projects in oil, gas and petrochemical industries.
Oil Reserves
The higher output has been planned in view of the country’s potential regarding oil reserves, as Iran holds about 1,200 billion barrels of oil equivalent underground, which include reserves of crude oil, natural gas and gas condensate.
Operations are underway to develop several oilfields to increase the crude output capacity in the country.
The fields include South Azadegan and Nargesi oilfields in Khuzestan Province, Naft-Shahr Oilfield in Kermanshah Province and Azar Oilfield in Ilam Province.
According to the latest reports, Iran is preparing to raise its crude oil production capacity to over 4 million barrels per day by the end of the current Iranian year (March 2023) from the current 3.8 mbpd.
Cooperation with local knowledge-based companies is a priority. “Nevertheless, transferring cutting-edge technology to the country is also important, as depriving ourselves of advanced knowhow will hinder progress,” he said.
According to the official, domestic manufacturing factories are doing their best to produce much-needed pieces and parts in the oil and gas sector, but they need to redouble efforts to meet international standards.
One of the main measures that NISOC has been carrying out over the past few years is the collection of associated petroleum gases from oilfields. It collects more than 19 mcm of APG per day in cooperation with private firms and in line with the plan to zero gas flaring in the southern and southwestern regions.
Collecting APG from oil and gas fields is a priority of the Oil Ministry to help safeguard the environment, prevent the loss of national wealth and create jobs.
