Iran Crude Production Cost Most Reasonable in Mideast

Iran Crude Production Cost  Most Reasonable in MideastIran Crude Production Cost  Most Reasonable in Mideast

In Iran's central areas, oil can be produced at a finished cost of $1 per barrel, managing director of Iranian Central Oil Fields Company said.

"Production-wise, the least expensive crude in the world can be produced in Iran's central areas that are rich in oil and gas resources," Salbali Karimi was quoted as saying by Mehr News Agency.

Comparing oil production expenses in Iran with those of other parts of the world, Karimi noted that such costs are the most reasonable among Persian Gulf states.

"In some Iranian oilfields, especially in central parts, the finished cost of producing each barrel can be as low as $1," he said.

Based on statistics, the marginal production cost per barrel in Russia, Oman, the UAE, Iraq and Saudi Arabia are $18, $15, $7, $6 and $3 respectively.

According to Karimi, in spite of low production costs in these areas, plans have been made to reduce them even further.

Referring to oil price fluctuations and their effect on oil and gas development projects in Iran's central area and south Zagros, he said, "Ups and downs in oil markets and price fluctuations are not something new as we have experienced such shocks since 1997 every seven years."

Karimi believes that the most drastic fluctuations in oil prices were recorded in 1979 concurrent with the victory of Islamic Revolution and in 1985 when the Iraq-imposed war broke out.

Nonetheless, prices started to rise eventually and the upward trend continued until 1997 when they settled at $60 per barrel.

Underlining the 2008 global economic recession and its effect on oil prices, the ICOFC managing director noted that the most underlying reason for such dramatic changes is the fact that oil is not a consumer goods. Besides, it overshadows political, economic and security issues, which explain why oil investment and production projects entail more risks.

According to the official, energy markets cannot tolerate low prices for the long-term as they should be fair enough so that both investors and producers can reap tangible benefits.

  70-Year Supply

Bijan Alipour, the National Iranian South Oil Company's director general, also believes that oil production from the southern parts of Iran can continue for at least 70 years.

However, the production rate can increase provided modern enhanced oil recovery methods are applied.     

EOR is the implementation of various techniques for increasing crude  production from an oilfield.

He announced that a large crude oil desalination factory will go on stream by the end of 2016 in Karoun area in southern Iran to reduce not only the fouling up of the crude distillation unit but also corrosion in the distillation tower.

Crude oil consists of varying amounts of water and inorganic salts. The presence of salts, especially chlorides, corrodes oil processing equipment. 

According to official statistics, there are 45 gas, 24 oil and 2 oil and gas fields in Iran's central areas, holding an estimated 8.5 billion barrels of oil and 18 trillion cubic meters of gas.

A lack of unity at an OPEC meeting last Friday caused a sharp decline in price earlier in the week and data showed that an unexpected drawdown in US crude stockpiles did little to buffer the fall. Brent Crude futures started the week around $42.90 a barrel and have since slipped nearly 9% during the week.