Crude Output to Reach 4 Million bpd in June

Crude Output to Reach  4 Million bpd in JuneCrude Output to Reach  4 Million bpd in June

Iran's oil production capacity will reach its pre-sanctions level of 4 million barrels a day in two months, the head of National Iranian Oil Company said, reaffirming Iran's policy of pumping more to win back the market share it lost to rival producers under western sanctions.

The country pumped around 4 million barrels of crude per day in 2011, but output was cut to 2.5 million barrels after the US and the EU intensified sanctions against Iran's nuclear program.

Sanctions significantly curtailed Iran's trade with the outside world and the export of crude, Iran's most important commodity, fell to just 1 million barrels a day from 2.5 million bpd pre-sanctions.

Rokneddin Javadi, who is also a deputy oil minister, said oil production at the National Iranian South Oilfields Company—NIOC's largest subsidiary—will reach 3 million bpd in June, and "that will bring total oil production to pre-sanctions level".

The official said last week output exceeded 3.5 million barrels a day, ISNA reported.

NISOC, which was established before the 1979 Islamic Revolution, produces more than 80% of all crude oil and more than 15% of natural gas in Iran. It is in charge of Iran's biggest oilfields, including Azadegan, Yadavaran and Ahvaz.

Mohsen Qamsari, NIOC's director of international affairs, also said the signing of new oil deals, particularly with European buyers, will consolidate oil exports at 2 million bpd in 2016.

Southeast Asia as well as India and Turkey are traditional markets for Iran's crude. But the Middle East country is looking into western markets to ensure it will have enough room for its surging output in a world awash with more than 3 billion barrels of spare oil.

Hellenic Petroleum, Greece's biggest refiner, was the first in line to sign a crude deal with Iran after sanctions against it were officially lifted on January 16. It was followed by a trio of agreements with France's Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia's second-largest oil company Lukoil.

Qamsari said Shell and BP, Iran's high-profile crude customers before sanctions, are discussing terms to resume imports. He added that NIOC is in advanced negotiations with Eni and Saras to supply crude oil to Italian refiners on a long-term basis.

Eni is interested in taking in 100,000 barrels of crude oil per day from Iran and Saras is in talks for a 60,000-70,000 bpd deal.

In a statement last week, Oil Minister Bijan Namdar Zanganeh said Iran's oil contracts with European buyers amount to 700,000 bpd, though some deals are not effective yet.

Economy Minister Ali Tayyebnia also said on Monday that oil exports could have bottomed out, had anti-Iran sanctions remained in place.

"Oil and gas condensates exports were previously 2.5 million barrels a day and reduced to 900,000 barrels" when President Hassan Rouhani took office in mid-2013, Tayyebnia said.

"But the second phase of US sanctions aimed to cut exports by 1 million barrels, which means exports would have fallen to zero levels."

------- Oil and Gas Projects

The NIOC chief said finalizing the details of Iran's new oil and gas contracts is a protracted process, but foreign companies can bid for conducting technical studies on Iran's hydrocarbon fields in standalone agreements.

Javadi stressed that such an agreement, already reached with Total and Germany's Wintershall, does not grant drilling rights to signatories outside the framework of the much-anticipated Iran Petroleum Contracts.

"These companies sign a non-disclosure agreement without further commitment to use their technologies only to study the fields and deliver their findings to NIOC," he said.

Wintershall Holding, Germany's largest crude oil and natural gas producer, has reached an agreement to conduct technical surveys on four oilfields in western Iran.

NIOC also signed an NDA with Total last month that will allow the French heavyweight to study Iran's giant South Azadegan Oilfield, a joint field with Iraq.

The NIOC chief also said Tehran and New Delhi are working out the technical and financial details of a deal to hand over the development of Farzad-B Gas Field to Indian contractors.

Javadi hoped the deal, which has been excluded from the 52 oil and gas projects set to be offered under the IPC framework this year, will be wrapped up in 2016.