Oil Industry Needs $30b Investment

Oil Industry Needs $30b InvestmentOil Industry Needs $30b Investment

Oil industry requires $30 billion investment per annum for maintenance, production stability, and development projects, deputy oil minister Mansour Moazzami said Saturday.

Investment has shrunk in the oil and gas industry over the past years, Moazzami was quoted by Shana news agency as saying. Development and maintenance plans were delayed or halted due to lack of finances.

The oil ministry has managed to increase natural gas production capacity by 100 million cubic meters per day (mcm/d) in the current Iranian calendar year (ends March 20) by bringing to the fore projects with higher physical progress. "There are plans to increase gas output by another 100 mcm/d next year from the South Pars gas field in the Persian Gulf," Moazzami stated.

South Pars is the world's largest gas field, shared between Iran and Qatar, covering an area of 3,700 square kilometers of Iran's territorial waters in the Persian Gulf. It adjoins Qatar’s North Field, which measures 6,000 square kilometers.

Although Iran has the world’s fourth largest proven oil reserves and second largest natural gas reserves, UN, US and EU sanctions relating to its nuclear program have significantly affected Iran’s energy sector.

Negotiations between the P5+1 (China, France, Russia, the United Kingdom, the United States and Germany) and Iran to ease those sanctions have been ongoing for almost two years, and the parties’ self-imposed deadline to reach agreement has once again been extended, this time to June 30.

The oil ministry won’t be able to pay staff or invest in boosting production if parliament proceeds with a plan to slash funding, Oil Minister Bijan Namdar Zanganeh said earlier this month.

“The oil industry’s situation is deplorable,” Zanganeh said while addressing the parliament in mid-February. A draft bill reviewed by parliament would cut the ministry’s budget to $3 billion in the Iranian year that begins March 21. That’s down from $13 billion a year earlier.

“This ministry will face problems in meeting the salaries of staff let alone investing in joint oil and gas fields,” Zanganeh said. “How are we to manage the oil industry with such an amount?”

Iran, whose crude exports are banned in Europe because of sanctions, pumped 2.78 million barrels a day of oil in January, down from an average of 3.6 million in 2011.