Zanganeh: Iran Will Not Accept New Crude Cuts

Iran has agreed to produce an average of 3.8 million bpd under the current production cut deal and data by OPEC show it has largely abided by its promise
Iranian crude output is rapidly decreasing because of belated investments.Iranian crude output is rapidly decreasing because of belated investments.

Iran will not settle for any agreement that may compromise its crude oil market share, Oil Minister Bijan Namdar Zanganeh said ahead of a meeting of OPEC and non-OPEC countries in Vienna that discussed deeper cuts to a global supply cut deal.

"We won't accept [any agreement] to produce less crude than the levels before the sanctions," Zanganeh was quoted as saying by Mehr News Agency on Thursday.

The statement came as members of the Organization of Petroleum Exporting Countries and other nations gathered in Vienna on Friday to check compliance with a deal to cut 1.8 million barrels per day through March next year and discuss possible upgrades to the accord.

Iran pumped around 4 million barrels a day before tougher international sanctions hampered its economy and energy sector in 2012.

Zanganeh said Iranian oil exports had dwindled to just 1 million barrels per day from 2.5 million bpd when he became oil minister in 2013 under President Hassan Rouhani's administration.

"Following the lifting of sanctions, we quickly raised production to the pre-sanctions level. We faced strong opposition from OPEC countries, but we listened to no one and didn’t budge from our stance," he added.

Iran has agreed to produce an average of 3.8 million bpd under the current production cut deal and data by OPEC show it has largely abided by its promise. The group's No. 3 supplier pumped 3.82 million barrels per day in August, down 2,300 bpd compared to the previous month, OPEC said in its latest monthly report, citing secondary sources.

The plunge of crude prices in early 2016 to their lowest levels in many years prompted oil producers, including OPEC's de facto leader Saudi Arabia, to negotiate a supply cut agreement to lift prices. But the kingdom found itself at loggerheads with a resilient Iran that insisted on recouping the market share it lost under economic sanctions.

"We went through a lot to raise oil output. There were a lot of talks and disrespects, but we didn’t back down. I declared that I will never agree to go back to the days of sanctions," he said.

--- Production

Zanganeh noted that Iranian crude output is "rapidly decreasing" because of reasons other than the supply cut deal.

"Our production is rapidly decreasing because of belated investments," he said.

The oil minister has spearheaded the design of a new model of contracts, dubbed Iran Petroleum Contract, to attract foreign finance worth $200 billion for energy projects.

"We need between $40 billion and $50 billion in the first wave of investment," he said.

Tehran has envisioned $130 billion in investment to develop its oil and natural gas fields. The new investments are also aimed at boosting the rate of recovery from operational fields.

Zanganeh said raising production by 1% from all oilfields would translate into 8 billion additional barrels and $400 billion in revenues with oil at $50.

"We plan to become the No. 1 country in the region by 2025, while some low-key countries are outperforming us," he said.


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