Iran Favors Oil Freeze After Producing 4m bpd

Iran Favors Oil Freeze After Producing 4m bpdIran Favors Oil Freeze After Producing 4m bpd

As long as Iran's pre-sanctions target of producing 4 million barrels of oil per day has not been reached, the country will not participate in meetings for discussing an oil freeze, Iran's oil minister said on Saturday.

"Our daily crude export stood at 1.7 million in February and projections have been made that the level will reach 2 million bpd in March," Bijan Namdar Zanganeh was also quoted as saying by Mehr News Agency.

Asked whether Russian Energy Minister Alexander Novak would try to convince Iran to join an oil output freeze during a visit this week, Zanganeh said Iran may show commitment to the freeze after its production reaches 4 million bpd.

A meeting between oil producers to discuss a global pact on freezing production is unlikely to take place in Russia on March 20 as Iran will not attend it, sources familiar with the matter said last week.

On the recent volatility in oil prices, the official added that crude has fallen back below $40 a barrel as major producers, including Saudi Arabia and Russia, have been working on a plan to freeze output at January levels.

This has provided a powerful prop for the oil market because it has shown traders that Saudi Arabia, the world’s biggest exporter and the main cause of the oil market glut, is presently concerned about the length and depth of the price rout to consider action.

Zanganeh believes that oil at $70 or less a barrel would be fair, though it is impossible to predict oil prices for 2016.

Ruling out the probability of OPEC members' emergency meeting, he said, "There has been no consensus among members and holding talks would hurt the crude oil market if OPEC made no decision to shore up falling prices."

---- Talks With Oil Giants

Describing his talks with Lorenzo Simonelli, General Electric's chief executive of oil and gas division, as constructive, Zanganeh added, "A new chapter of cooperation will start with American and European companies in Iran's oil industry."

He said there is no legal constraints for American enterprises to invest in Iran's oil and gas mega projects, as limitations to get involved with Iranian projects were imposed by the US administration.

The visit by Simonelli comes at a time when Iran is aiming to boost its crude oil exports and recover the oil market share it lost as a result of international sanctions imposed over its nuclear program.

According to the oil minister, Siemens' managers,including president and chief executive officer of Siemens, Joe Kaese, have also pledged to compensate for their long absence in Iran by shipping and installing high-tech turbines and compressors as soon as possible.

Siemens is planning to expand collaboration with Iranian firms, including Oil Turbo Compressor Company, which manufactures gas compressors, turbo generators and gas turbines.

---- Self-Reliance in Gasoline Production

During a visit to the Persian Gulf Star Refinery, the oil minister said that with the capacity to refine 360,000 barrels of gas condensates per day, this refinery is among the largest refining complexes in the world and more than $3.2 billion have so far been invested in the project.

"The first phase of Persian Gulf Star Refinery's Euro-4 gasoline complex is expected to become operational by October 2016," he said.

"As soon as other phases go on stream, gasoline production quality and quantity will be affected positively. Moreover, Iran will become self-reliant in gasoline production by producing 12 million liters of Euro-4 gasoline per day."

Holding talks with the project shareholders, including Tamin Oil, Gas and Petrochemical Investment Company, National Development Fund of Iran and Bank Mellat's managing director, the minister said the Iranian government is determined to complete the project by removing financial constraints.

Pointing to the fact that 60% of the much-needed equipment to undertake the project were designed and built domestically, Zanganeh said, "Many technical issues need to be dealt with, as we are waiting for Siemens to release the rest of our blocked equipment."

The first batch of high-tech turbines and compressors blocked by Siemens due to international sanctions was released and unloaded in Asalouyeh on February 29.