Iran Ready to Raise Oil Output

Iran Ready to Raise Oil OutputIran Ready to Raise Oil Output

Tehran is "completely ready" to boost oil production by 500,000 barrels per day soon after the lifting of sanctions to regain its market share from competitors who have glutted the global crude output over the past three years, National Iranian Oil Company's deputy for international affairs said.

"Previous buyers of Iranian crude are ready to resume imports, while new countries have expressed interest in our oil," Seyyed Mohsen Qamsari was quoted by IRNA as saying.

The official added that Iran's oil customers are determined to increase crude imports from the Islamic Republic to the pre-sanctions levels.

South Africa, in particular, has expressed interest in Iranian crude. Earlier this month, the country's deputy foreign minister, Nomaindiya Mfeketo, said South Africa would resume oil imports from Iran "the day after" sanctions are lifted.

Iran and six world powers reached a historic deal on July 14 in Vienna that would limit the Persian Gulf country’s nuclear program in return for removing sanctions on its energy and financial industries.

Iran was once the biggest oil supplier to South Africa, which boasts the continent's most industrialized economy and was its second-biggest consumer of crude oil, contributing around 25% of its total oil demand, or around 380,000 bpd.

As the second largest economy on the continent, South Africa also has the highest rate of energy consumption.

Qamsari refuted a significant jump in crude exports to Japan. He said the apparent rise in oil shipment to the Southeast Asian country is because Japan's customs office has included several Iranian gas condensate shipments as part of oil imports from Tehran.

According to reports, Japan’s imports of Iranian oil in July stood at 158,000 bpd, a 22% increase compared to the same period of last year. This is while other traditional clients such as China (575,000 bpd) and India (215,000) had meager increases, and South Korea (66,000 bpd) saw a major decline of 48.8% in importing Iranian oil in July.

  With or Without Sanctions

Iran is planning to raise oil output by 500,000 bpd by late November or early December with sales to Asia "even before most western sanctions would lift," Ali Kardar, the chief of investment at NIOC, was quoted by The Wall Street Journal as saying.

He was speaking on the sidelines of a conference in the Swiss capital Geneva earlier this week for promoting business ties between Iran and the 28-nation bloc.

"We are ready … by mid-2016; Iran expects that its exports will exceed today’s by 1 million barrels," he told the journal.

China and South Korea have expressed interest in importing more Iranian oil, Kardar told the journal.

China, India and South Korea are now the biggest consumers of Iranian oil exports, which total about 1 million barrels a day.

Kardar said he did not expect the return of Iranian crude to cause a collapse in oil prices, predicting a $3-4 drop when the new Iranian supplies hit the already oversupplied crude market.

Iran plans to produce 3.8 million to 3.9 million barrels of oil a day by March, with output rising by the 500,000 bpd milestone on the heels of sanctions' removal and by 1 million barrels within the following five months, according to Oil Minister Bijan Namdar Zanganeh.

  Oil Advantage

Major global oil companies are willing to invest in Iran's oil industry due to low costs of oil production in the Persian Gulf country, Seyyed Mehdi Hosseini, the head of Iran's Oil Contract Revision Committee, said on Friday.

"The costs of exploring and developing oil and gas fields in Iran are lower than global averages," he said, stressing on the country's low investment risks and production costs.

Hosseini added that it costs $50-60 to produce a barrel of shale oil, but crude extraction from Iranian oilfields comes at a much cheaper cost of $10 per barrel, consequently making it economically viable for foreign investors to operate in the Iranian petroleum sector. Iran would press other members of the Organization of Petroleum Exporting Countries to discuss the country's return to the market at the group’s next meeting in December in Vienna.

Iran sits on some of the world's richest hydrocarbon resources, having an estimated 157 billion barrels of crude oil and 34 billion cubic meters of natural gas.