Requisites for Boosting Crude Output

Requisites for Boosting Crude Output Requisites for Boosting Crude Output

Iran is ready to boost crude oil production immediately after sanctions in three major categories are lifted, the Oil Ministry's deputy for international affairs said on Monday.

"Iran will raise crude output by 500,000 barrels a day shortly after international restrictions on money transfer, tanker rental for oil and petrochemical exports, and access to protection and indemnity insurance for oil tankers are lifted," Amirhossein Zamaninia was quoted as saying by Mehr News Agency.

Zamaninia expected sanctions to be removed by late December or January next year.

Once the second biggest producer in the Organization of Petroleum Exporting Countries, Iran is keen to regain lost grounds in global oil market.

In August, Oil Minister Bijan Namdar Zanganeh said Iran can increase crude production by 500,000 bpd within a week after the removal of sanctions and by 1 million barrels in the following five months.

A month later, an Oil Ministry official declared that the Islamic Republic will reach the 500,000-bpd milestone by late November or early December even before most western sanctions are lifted.

However, Tehran faces tough competition from other producers, including OPEC kingpin Saudi Arabia, who opted to raise production and cut prices to protect market share.

Sanctions curbed Iran’s sales of crude and condensate to 1.4 million barrels a day in 2014 from 2.6 million in 2011, according to the US Energy Information Administration. Overall, Iran produces a little less than 3 million bpd, most of it consumed domestically.

Zamaninia described the current level of oil export as meager compared to its massive hydrocarbon resources and said negotiations are underway to secure new markets for extra Iranian crude in the post-sanctions period. Officials have reiterated in the past few months that "traditional customers" of Iranian crude, namely China, Japan, India and South Korea, will raise imports once sanctions are lifted.

South Africa has also expressed interest in Iranian crude. The country's deputy foreign minister Nomaindiya Mfeketo in September pledged that Pretoria would resume oil imports from Iran "the day after" sanctions are lifted.

Iran and six world powers reached a landmark agreement on July 14 in Vienna, which would limit Tehran's nuclear program in exchange for an end to US-engineered sanctions that have been in place for decades.

Iranian oil and gas sector requires billions of dollars in investment and transfer of knowhow has become a prerequisite in negotiations with international companies willing to invest in the country's energy sector.

  Post-Sanctions Opportunities

Deputy Foreign Minister Abbas Araqchi called for gearing up for post-sanctions period and described the flock of foreign firms to Iran's energy market as "both an opportunity and a threat".

"We should be prepared for a new era … however, the era is rife with more opportunities and fewer threats," he told a convention of senior officials at security departments of oil companies and organizations.

Araqchi added that the nuclear accord, officially known as the Joint Comprehensive Plan of Action, will be implemented within two months, paving the way for signing multibillion dollars in foreign investment.

Major international oil and gas companies are expected to convene in Tehran later this month for a long-anticipated conference in which the Persian Gulf country will lift the curtain on up to 50 oil and gas projects under the revised framework of its new oil contract known as Iran Petroleum Contract.

"Among multitude of projects, Iran can finalize five major deals with foreign contractors to develop its oil and gas fields before President Hassan Rouhani's first term in office comes to an end by mid-2017," Rokneddin Javadi, another deputy oil minister, said in an interview last week.