4m Barrels of Oil Set to Sail for Europe Markets

4m Barrels of Oil Set to  Sail for Europe Markets4m Barrels of Oil Set to  Sail for Europe Markets

Three international vessels will be heading to Europe "within the next 24 hours" after loading 4 million barrels of oil at Iran's terminals, managing director of the National Iranian Oil Company said in a statement on Saturday.

"Of a total of 4 million barrels, 2 million are ordered by France's Total and the rest are purchased by two Russian and Spanish companies," Rokneddin Javadi, who is also a deputy oil minister, was quoted as saying by Shana.

The Russian company, which Javadi did not name but is thought to be Lukoil, will supply Iran's crude oil to its refinery in Romania.

Iran's Oil Minister Bijan Namdar Zanganeh said last week that the Persian Gulf state had signed deals to export 300,000 barrels of oil per day to European customers since international sanctions against it were officially lifted in January.

NIOC and Total have signed a deal under which the French oil and gas major will buy 160,000 bpd of crude oil from Iran to be delivered in Europe.

According to shipping reports compiled by Bloomberg, Spanish refiner Cepsa, Total and Lukoil of Russia have provisionally booked cargos to sail from Iran’s Kharg Island to European ports.

While some of those bookings may not be completed, more cargos could also be chartered before the end of the month.

Iran, once the second-biggest producer of the Organization of Petroleum Exporting Countries and now its fifth-biggest, has vowed to ramp up oil production by 500,000 bpd in the short-term to reclaim the market share it lost to rival producers such as Saudi Arabia and Iraq.

------- Making Room

To ensure there will be room for its additional crude in a highly-competitive market, the Islamic Republic has not only pinned hopes on an increase in imports by its traditional oil customers such as China, Japan, South Korea and India, but has also reached out to European companies.

Iran pumped an average of 3.6 million bpd in 2011. Production fell in 2012 to a 25-year low of 2.7 million bpd after the US and the European Union introduced tougher sanctions against Tehran to target its nuclear program.

The country pumped 2.8 million bpd on average last year. Under international sanctions, Iran was allowed some sales to buyers, including China, India, Japan, South Korea and Turkey.

Roughly a week after sanctions were lifted on Jan. 16, Greece's biggest refiner Hellenic Petroleum said it had signed a deal to resume the import of Iran's crude.

In addition, Italian oil and gas company Eni has expressed interest in buying 100,000 barrels of crude oil from Iran with its representatives expected to visit Tehran in the near future to discuss the contract. Italy’s Saras SpA refinery is also interested in buying 60,000 to 70,000 bpd.

Meanwhile, the world’s largest independent oil trader Vitol was the first company to confirm this week it had effectively resumed buying oil from Iran after the end of economic sanctions.

------- Rise in Exports

According to a report issued by the deputy for planning and supervision over hydrocarbon reserves in the Oil Ministry, Iran's crude and gas condensates export experienced a 13% rise during the first six months of the current Iranian year (ending March 19, 2016) compared with the corresponding period in 2014.

The report reveals that more than 88% of the country's gas condensates are produced by Pars Oil and Gas Company.

Moreover, gas condensates output witnessed a 16% increase compared with the corresponding period in 2015. Needless to say, the jump in production has something to do with the South Pars phases 12, 15, 16, 17 and 18, which have gone on stream during the said period.

------- Elimination of Intermediaries

Concentrating on oil export, clarifying crude sale transactions and putting an end to illegal activities of oil intermediaries are among other achievements of the National Iranian Oil Company highlighted in the report.

In line with the policy to increase oil export, the Oil Ministry has made plans to expand Jask Oil Terminal for oil storage.

The ministry is also making efforts to meet its much needed financial challenges as its revenues have experienced a drastic decline due to the dramatic decline in oil prices.

The National Development Fund of Iran has agreed to allocate $6 billion to complete oil and gas projects with high priority.

Furthermore, the ministry has been actively involved in acquiring the frozen assets of NIOC worth $4 billion from the Central Bank of Iran to finance oil and gas projects. It also played a key role in offering oil and its byproducts in the country's Energy Bourse in addition to issuing Salaf bonds, a type of Islamic loan that does not have a negative yield.

The report also added that the Oil Ministry has sweetened the terms of the new oil contracts, officially known as Iran Petroleum Contract, to spur foreign companies to invest in Iran's mega projects. All modifications were approved by the Cabinet before IPC was unveiled in Tehran on November 29, 2015.