Tehran Closing In on Pre-Sanctions Oil Target

Tehran Closing In on  Pre-Sanctions Oil TargetTehran Closing In on  Pre-Sanctions Oil Target

A senior oil official on Saturday said Iran is now pumping more than 3.5 million barrels of oil per day, meaning it is now some half a million barrels away from its highest crude output level seen before international sanctions against it were intensified in 2012.

"Oil exports in April have reached an average of 2 million barrels a day," Rokneddin Javadi, deputy oil minister and the chief executive of National Iranian Oil Company, said on Saturday.

Javadi was addressing a conference assessing the impact of Iran's Resistance Economy policy in the petroleum industry, ISNA reported.

The calculated statement comes a day ahead of a crunch meeting between OPEC and non-OPEC producing nations in Doha, Qatar, which are set to discuss freezing oil output to shore up prices.

Javadi's data are in accordance with a report published by Bloomberg earlier this week that Iran's average oil exports in the first two weeks of April exceeded the 2-million-bpd mark.

Iran’s crude shipments have risen by more than 600,000 bpd this month, the report said, adding that international vessels carried about 28.8 million barrels of crude, or more than 2 million bpd, from the Persian Gulf country’s ports in the first 14 days of April.

That compares with a rate of about 1.45 million barrels a day in March.

After reaching a historic accord with six world powers in July on its nuclear program, Tehran said it will steadily ramp up crude output it lost to rival producers, such as OPEC's de facto leader Saudi Arabia, which has been producing at record-high levels in the past several months.

But Tehran and Riyadh have increasingly found themselves at loggerheads over a series of political and economic disputes.

Iran says it will not join the freeze talks before reaching its pre-sanctions oil production level of 4 million bpd. Saudi Arabia, which spearheaded the output freeze plan along with Russia in February, says it will not support the initiative unless Iran comes on board.

The Iranian Oil Ministry's news agency Shana reported on Friday Iran's OPEC Governor Hossein Kazempour Ardebili will attend the meeting on Sunday instead of Oil Minister Bijan Namdar Zanganeh. The message is clear: Iran will not compromise on its oil plans.

However, Reuters on Saturday quoted two sources familiar with the situation as saying that Iran will not attend the meeting in Qatar on Sunday. They noted that Iran had been informed that only those countries willing to agree to freeze their output level should attend.

Iran has said it supports the freeze but would not join it until it raises its output and market share to their pre-sanctions levels.

Sanctions imposed by the United States and other world powers were lifted in January in return for Tehran agreeing to temporary curbs on its nuclear program.

A rise in Iran's oil output will undermine efforts to rebalance the market in 2016, a Reuters poll of oil analysts showed this week.

  Domestic Efforts

Zanganeh on Saturday stressed that the enforcement of the Joint Comprehensive Plan of Action (the official name of the nuclear deal) has sped up the implementation of Resistance Economy.

"The Oil Ministry has done its best to pursue the economic policies outlined by the Leader (of Islamic Revolution Ayatollah Seyyed Ali Khamenei) to help bolster domestic production, curb dependence on oil exports, improve productivity and encourage Iranians to buy domestically-made products," he said.

Resistance Economy is a set of policies to counter sanctions and boost Iran's economic growth under punitive western restrictions that targeted the country's nuclear program.

According to the oil minister, focusing on boosting exports without paying attention to developing cutting-edge technology will bode ill for domestic enterprises, as their foreign competitors can easily overtake them via their state-of- the-art equipment.

"There are oil traders who cannot produce a single barrel of oil. Nonetheless, they have been able to generate billions of dollars in revenue simply by keeping pace and adopting new technology in their business," he said.

Referring to the ministry's plans to develop knowledge-based activities, Zanganeh noted that agreements worth $340 million were concluded with domestic research centers and universities with the aim of acquiring the much-needed technology to enhance recovery from oil and gas fields.

He also stressed that Iran's new petroleum contracts—aka IPC—will be signed in a way that domestic knowledge-based scientific centers can play an active role in exploring and developing oil and gas fields.

Zanganeh believes that knowledge-based firms should also embark on manufacturing oil industry machinery and installations via collaborating with international corporations to not only meet domestic needs but also export to potential markets in the region.

Pointing to Petropars as a knowledge-based company, he said, "When the enterprise was set up, many began to criticize, as they did not believe in transferring cutting edge technology to the country. However, the initiative turned out to be a blessing in disguise, as it helped us develop several oil and gas projects."

Asked about realizing the principles of Resistance Economy in the National Iranian Gas Company, Saeed Pakseresht, NIGC's deputy for research and technology, said, "Establishing three research institutes in the fields of LNG, water desalination and smart measurement systems are clear examples of following those principles."

According to the official, plans have been made to launch a pilot LNG research unit by the yearend.

"The water desalination technology center is implementing its projects as planned and impressive achievements have been made in designing and constructing such units," he said.   

Pakseresht added that applying smart systems in measurement is a new issue that is being followed by turbine research center in cooperation with Iran University of Science and Technology.