Crude Processing Capacity to Reach 3.2m bpd by 2021

Crude Processing Capacity to Reach 3.2m bpd by 2021Crude Processing Capacity to Reach 3.2m bpd by 2021

Iran is planning to boost crude processing capacity to 3.2 million barrels a day by 2021.

Speaking in a news conference on Tuesday, Oil Minister Bijan Namdar Zanganeh also called for a massive $200 billion investment to develop the oil industry, Shana reported.

"Crude processing capacity will reach 3.2 million bpd by the end of the sixth five-year development plan (2021) and early in the seventh plan," he said.

"Export of crude oil will increase following the rise in output. Ramping up oil exports is a top priority of President Hassan Rouhani's administration."

The plan puts Iran on track to reach its pre-sanctions oil production level of 3.6 million barrels. Output hit a 25-year low of 2.7 million bpd in 2012 after the US and the European Union intensified sanctions against Tehran over its nuclear program.

Iran was once the second-biggest producer in the Organization of Petroleum Exporting Countries, but sanctions significantly cut Iran's exports as it conceded market share to Iraq, now the second-biggest OPEC producer after Saudi Arabia.

Tehran pumped 2.8 million barrels a day on average last year. Data on Iran's preliminary tanker loading schedules suggest the country's overall exports is expected to total around 1.44 million barrels a day in February and about 1.5 million bpd in January.

"We need $200 billion in investment to increase extraction from joint oilfields and reach sustainable development," he said.

Zanganeh broke down the substantial figure into $130 billion for upstream sector and $70 billion for the downstream petrochemical sector, including for renovation of aging refineries and building new processing and production units.

To raise this huge amount of money, "a new model for oil contracts was devised", the minister said, referring to Iran's new contractual framework for oil and gas projects, which is officially known as Iran Petroleum Contract.

"Domestic financial resources can barely drive oil industry forward … Despite receiving $15-20 billion from the National Development Fund of Iran, we need foreign investment and, more importantly, technology."

Oil Ministry in November lifted the curtain on its new oil and gas contracts for international companies, and along with that, introduced 53 oil and natural gas development projects.

Officials say the IPC, which has been a subject of dispute inside the country, offers more attractive terms to foreign investors to develop Iran's untapped hydrocarbon reserves.

Zanganeh said increasing crude production from joint fields, in particular West Karun which is shared with Iraq, is a top priority.

 Iran produces around 160,000 barrels a day from the field, but plans call for ramping up production to 300,000 barrels in 18 months.

  Lukoil Deal

The senior Iranian oil official categorically ruled out an oil-for-goods barter deal with Russia.

Zanganeh referred to an agreement between National Iranian Oil Company and Lukoil to export crude oil to Russia's second-biggest refiner and said, "The deal has nothing to do with oil-for-goods barter with Lukoil … it [the barter] is all over."

Speculations mounted last year that Iran and Russia were negotiating a deal to exchange Iran's crude with Russian goods, with Iranian media citing officials at Moscow that the deal had been all but sealed.

According to reports, Lukoil is among several European refiners that have booked oil cargo delivery from Iran’s Kharg Island to European ports in the next two weeks.

  Petrochem Developments

Iran's petrochemical exports will reach $18 billion by the end of the current Iranian year (March 19, 2016), Zanganeh said, targeting $22 billion in annual petrochemical revenues in two years.

The Islamic Republic wants to become a major player in the global petrochemical industry by raising petrochemical production capacity to 180 million tons a year from around 60 million tons at present.

Tehran hopes to raise $70 billion in petrochemical investment over the next 10 years to fulfill its ambitions.

Meanwhile, the production of Euro-4 gasoline has soared nearly 10 times to reach 24 million liters a day since Rouhani took office in mid-2013, Zanganeh told reporters.

Iran imports around 8 million liters of gasoline per day, but it will become a gasoline exporter when Persian Gulf Star Refinery, Iran and Middle East's biggest refinery project, becomes operational by 2017.