Zanganeh Expects “Positive” Outcome at OPEC Meeting

Zanganeh Expects “Positive”  Outcome at OPEC Meeting
Zanganeh Expects “Positive”  Outcome at OPEC Meeting

I ran will not reduce its global market share under any circumstances, “not even by one barrel,” Oil Minister Bijan Namdar Zanganeh said Thursday, ISNA reported.

“We cannot trample on our national interest to be relieved of domestic pressure,” he said.

The Organization of the Petroleum Exporting Countries (OPEC) remains on the periphery when oil prices are above $100 per barrel, however it needs to come into play when there is a downtrend in prices, he said.

Over the past 50 years, OPEC members have shown that a general agreement emerges during hard times and “we are hopeful to reach a positive outcome” at the OPEC meeting in Vienna next week, he noted.

Brent crude fell from $115.71 a barrel on June 19 to $82.60 a barrel on Oct. 16, the lowest price in almost four years. It has fallen nearly 30 percent since late June due to rising production, and slowing global demand.

How much influence OPEC members can generally wield, Zanganeh said, depends on their level of production and oil surplus.  Iran can be a major player during the upcoming OPEC meeting due to its unprecedented surplus of oil over the past thirty years resulting from the sanctions.

He claimed that Iran’s oil output will double and revenue shortages will be compensated within two months if the sanctions are lifted.  “The global oil market cannot endure cheap oil and prices will need to normalize sooner or later.”

The US imposed tough sanctions on Iran to curb its nuclear program which it claims is geared to military use. Iran insists its program is peaceful. Iran and P5+1 have been holding marathon talks over the past year and are now busy thrashing a mutually acceptable “comprehensive deal” by a November 24 deadline that was set when the sides failed to reach an agreement before a previous deadline in July.

 Political Play

Some analysts believe political issues in general, and pressure the United States has piled up on Russia in particular, has depressed global oil prices.

Zanganeh said, “Oil and gas exports comprise the lion’s share of Russia’s revenues. Due to a slump in oil prices, Russia’s export revenues have dwindled by 25-30 percent, or one-fourth, even without any sanctions against the country.”

On Iran’s decision not to call for an emergency OPEC meeting, he said, “Venezuela called for a meeting, but it was met coldly by members. Agreement of all members is necessary for a meeting, but the situation is not ripe for this to occur.”

The oil market is under the influence of physical and psychological factors, according to the minister. “The price of oil was once $7 a barrel.  I realize how difficult it is to restore balance in a turbulent market.”

Stressing on the importance of unity among major oil producers, he said, “OPEC members should avoid taking any position that puts unity at risk. Consensus is the key for any action by OPEC.”

Zanganeh recently met with senior officials of OPEC members including emirs of Kuwait and Qatar, the UAE’s prime minister and Venezuelan foreign minister to exchange views ahead of the November 27 meeting.

 Gas Supply

Domestic gas supply during winter is one of the biggest concerns of the oil ministry, according to Zanganeh.

Gas comprises 70 percent of the country’s energy basket, while close to 85 percent of gas output is consumed by households as well as commercial and public sectors.

Power plants are major consumers of gas, while certain companies such as steel producers cannot replace gas with diesel fuel or mazut.

Gas production is around 600 million cubic meters per day (mcm/d) and exports at less than 30mcm/d, and more than 30mcm/d of gas is imported from Turkmenistan.

Zanganeh said a 5 percent decrease in gas consumption would save 30mcm of gas, approximately equal to the output of one phase of the South Pars gas field in the Persian Gulf.

The ministry aims to increase production in offshore and onshore phases of SP as phase 12A with 26mcm, phase 15 with 20mcm, a processing train in phase 16. A phase 12B train with 25mcm and phase 18 are expected to come on stream in the near future.

 Cheaper Oil in Budget

The government has projected oil prices at less than $80 per barrel in the national budget law for the next Iranian calendar year (March 2015-2016).

The government’s spokesperson Mohammad Bagher Nobakht announced that the government’s forecast of oil prices is at $70-80 per barrel.

“We sold oil at $104 in the first half of the year [March-September]. The average price in the second half is estimated at $82 per barrel, taking the average price for the year to $93. Considering the decline in global oil prices, Iran’s average oil price will not fall below $93,” Shana quoted Nobakht as saying.