Iran on Friday signaled that it is willing to work with Russian companies as partners in its oil industry as it seeks a fair share of the international crude market it lost under the international sanctions.
"We expect to reach our pre-sanctions oil production level soon," said Mahmoud Vaezi, the minister of information and communications technology at a press briefing after meeting Russian Energy Minister Alexander Novak in Moscow on Friday, Shana reported.
"After the lifting of sanctions [in January], we were determined to raise oil output to levels before the tightening of sanctions. We have fulfilled 80% of our target and need another two or three months to fully realize our plan," Vaezi said.
The meeting was part of four days of bilateral talks under the framework of Iran-Russia Joint Economic Commission in the Russian capital, co-chaired by Vaezi and Novak. Vaezi said Tehran plans to also discuss its oil and gas projects with Russian companies. "Work [on the new Iranian oil contracts] is complete. In the near future, we will talk to the Russian counterparts … We welcome close cooperation with oil companies in Russia. Given the level of our relations, establishing a working group on energy could be very effective," Vaezi was quoted as saying by Sputnik.
Iran is working on a new model of contracts, known as Iran Petroleum Contracts, to attract foreign investment and technology in its oil and gas sector after years of limited trade and economic exchange with the outside world.
IPC offers more attractive terms for investment to foreign firms compared to the previous buyback contracts that have been in place for more than 20 years.
The Russian minister said Gazprom is interested in developing Iranian gas supply and production and the oil major Lukoil is keen to resume cooperation in the Anaran Oil Block which it abandoned in 2010 after the international trade restrictions.
Once OPEC's second-largest producer, the punitive restrictions imposed due to the dispute over the nuclear program cut its oil production from nearly 4 million barrels per day in 2011 to around 2.5 million bpd, as exports sank to barely above 1 million barrels.
Tehran says it will match its pre-sanctions crude output level by September. It is planning to boost crude production to 5.8 million bpd within five years, including 4.8 million bpd of heavy crude and 1 million barrels of condensates.
Int'l Crude Market Outlook
Novak said an oversupply of crude oil will continue to weigh down the global market for the remainder of the year and that the market will return to balance by the second half of 2017.
"We can see that the imbalance of the early months of this year will somewhat decrease by the yearend, but the oil glut in the market will remain," Novak told journalists.
He reaffirmed his ministry’s earlier forecast that oil prices will stay in the $40-50 bracket, but added that market volatility looked set to continue into next year. The Russian Energy Ministry expects that the market will return to balance by the second half of 2017.
Oil benchmark prices went down again on Friday due to the ongoing oversupply, with oil trading at slightly over $40 a barrel.
Supply and demand imbalance in the global oil market will even out by mid-2017, according to Novak.
"We see that the imbalance [between supply and demand in the oil market] is still not eliminated. We expect that it will happen only by the middle of next year," Novak said.
He added that fundamental factors, i.e. supply and demand, do not suggest that crude prices will be above $50 per barrel in 2016, and that the ministry would thus not readjust its forecast for oil prices standing at $40-50 per barrel.
