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Iran's oilfields are in the middle of their life cycle and production from some fields is declining by 300,000 barrels a day.
Iran's oilfields are in the middle of their life cycle and production from some fields is declining by 300,000 barrels a day.

IPC Dispute Taking Toll on Iran's Oil Industry

The world is moving toward renewable and cleaner energy sources and Iran should draw as much oil as possible before it is too late

IPC Dispute Taking Toll on Iran's Oil Industry

Iran is running out of time to introduce its new oil and gas contracts to internationals in what has turned into a costly political dispute at home, National Iranian Oil Company's director for international affairs said in an interview.
"Two years of delay in introducing the Iran Petroleum Contracts have impeded production from joint fields while neighboring countries are making the most out of shared reserves," Mohsen Qamsari was also quoted as saying by the Oil Ministry's official news agency Shana on Saturday.
The official denounced the contracts' critics who have turned a blind eye to long-term national interests for the sake of their own short-term interests.
IPC is aimed at bringing back foreign companies to Iran's oil and gas projects following years of limited cooperation with multinationals and inadequate investment in the key sector. But the new contractual framework has faced strong opposition inside the country.
"They have created tension to scare off foreign investment. Iraq is exporting 1 million barrels per day from joint oilfields, while Iran is at the beginning of the road," he said.
The first round of tenders under the IPC was slated for February, but controversy over some of the terms of the contracts has stalled it. Some domestic opponents say IPC would allow foreigners cheap access to Iran's massive hydrocarbon resources under long-term contracts.
Advocates argue that Iran needs to make up for years of underinvestment in the energy sector by sweetening the terms of oil and gas contracts.
Iraq has displaced Iran as the second biggest producer of the Organization of Petroleum Exporting Countries.
Despite grappling with the 2003 US invasion and an ongoing battle with the self-styled Islamic State terrorist group that has seized swathes of territory since 2014, Iraq has boosted crude production to 4.6 million barrels per day.
Iran is currently pumping nearly 4 million bpd of crude, a level last seen before tighter international restrictions were imposed against its nuclear program in 2011 and 2012. Output fell to around 2.5 million barrels when sanctions were in place.
Tehran has recouped some of its lost market, but plans to attract billions of dollars for new and incomplete oil projects to uplift its faltering economy.
"Iran's oilfields are in the middle of their life cycle and production from some fields is declining by 300,000 barrels a day," Qamsari said.
Iran is negotiating with several foreign companies to implement enhanced oil recovery techniques in its aging fields.

  Shadow of Renewables
Qamsari warned that the world is moving toward renewable and cleaner energy sources, and Iran should draw as much oil as possible before it is too late.
"Critics should bear in mind that the world is evolving and oil may lose its position in the global energy basket over the next decade," he said.
"Oil is mostly used in transportation sector, but the fuel will take a backseat upon the rise of electric vehicles."
The market for electric cars is gaining traction. American automaker Tesla Motors is building one of the world's largest factories in the US to produce highly-efficient batteries for a new line of electric cars.
Some of the world's biggest oil producing nations have also started moving toward renewables, gearing for a not-too-distant post-oil era.
Saudi Arabia, the world's top oil producer, has consistently pushed crude output to record levels over the past few months, but it plans to install 9.5 gigawatts of renewable energy by 2030. The kingdom had initially planned four times the current production target, but scaled back its renewable program due to low crude prices.

 

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