Iran's Oil Minister Bijan Namdar Zanganeh accused its regional neighbors of trying to take away its customers by offering cheaper oil, but said despite not offering much of a price discount itself, Iran had managed to retake 1 million barrels per day.
Iran's crude is similar to that of Iraq and Saudi Arabia, and these producers fight for a share of the same market; being competitive has proved a huge marketing challenge.
Zanganeh made the remark in an interview with S&P Global Platts after OPEC's meeting in the Austrian capital Vienna.
It follows Saudi Arabia's new Oil Minister Khalid al-Falih's comment that there is "no reason to expect that Saudi Arabia is going to go on a flooding campaign", suggesting gentle moves in crude supply so as not to shock the market.
OPEC's largest producer has kept output fairly steady since January at above 10 million bpd and OPEC made no change in output policy.
Iran has looked to reclaim market share since nuclear sanctions were lifted in mid-January, with Zanganeh stating that output is currently 3.82 million bpd. He predicts Iran will have around 5-6% spare production capacity after reaching 4 million bpd by the end of the year.
Zanganeh said India, China, South Korea, Europe (including Turkey) and South Africa were primary markets but that Iran "should look more in Europe and Africa."
This is especially the case for plans to invest in refineries in other countries, with 1.3-1.4 million bpd to be exported as feedstock to overseas refineries, but cautioned that finance could be an issue.
"We have this proposal but the National Iranian Oil Company doesn't have the money to do it. So we proposed that the National Development Fund comes and does the investment, either directly itself or giving loans to non-state sectors and buys [shares] in those refineries in the chosen destinations, under the condition that they take all their feedstock from Iran, or a main part of the feedstock," Zanganeh said.
------- Lucrative Prospect
Zanganeh stressed that it is very lucrative for international energy companies such as Total, Lukoil and Eni to invest in Iran.
"Oil [production cost] in our region is very low. In Iran, it costs a maximum of $10 per barrel," he said, adding that there are contractual risks, but they are unlikely to act as a deterrent, without elaborating.
He did think that US companies were afraid but hoped that this will change, adding that "the way is open for them from our side."
Zanganeh said the whole investment plan will require $70 billion in the coming years and that Iran's Petroleum Contract will be part of that.
