Oil and gas spurred Iran’s economic growth in the first half of the current fiscal year (March 21-Sept. 22).
New data released by the Statistical Center of Iran show the economy grew 5.9% in H1 fiscal 2021-22 compared with last year’s corresponding period.
Excluding crude oil production, GDP growth stood at 4.1%.
The SCI data indicate that “crude oil and natural gas extraction” saw a massive 18.3% rise in H1.
“Crude oil and natural gas extraction” is a subcategory of “industries and mines” that expanded by 9.5%.
Other subcategories of “industries and mines”, namely “other mines”, “industry”, “energy” and “construction” registered a respective growth rate of -1.9%, 3.8%, 8.2% and 7%.
To put things into perspective, the main groups of services and agriculture grew by 4.8% and 4.3% respectively.
The oil and gas sector accounted for 14.3% of GDP in H1, up from 12.8% in the period under review.
The upcoming fiscal year’s (March 2022-23) budget bill expects crude oil sales to stand at 1.2 million barrels per day to earn 3,818 trillion rials ($12.66 billion), accounting for about a quarter of general budget.
Increasing oil production was also the main driver of growth in the last Iranian year (ended March 20, 2021).
The sector generated 858.24 trillion rials (about $3.2 billion at the current exchange rate).
Iran plans to swiftly restore its crude oil production to pre-sanctions levels of nearly 3.4 million barrels per day (bpd), a senior Iranian industry official has said. It will restore almost 1 million bpd of oil production within a month of the US lifting the sanctions on Iranian oil.
Plan to Boost Oil Output
Iran is set to boost its crude oil capacity to 4 million b/d by March 2022, returning to levels not seen since before the US withdrew from the nuclear deal and reimposed sanctions on the country's crude sales in 2018, the Oil Ministry's news service Shana reported on Nov. 28.
"Our plan is to raise the oil production capacity to the pre-sanctions level by the end of the current [Iranian] year [March 20, 2022]," Mohsen Khojastehmehr, managing director of the state-owned National Iranian Oil Company, said, Shana reported.
The NIOC chief didn't give the current oil capacity but said it could grow to 5 million b/d within 10 years.
Natural gas is also part of the expansion plan, with one train in Phase 14 of South Pars offshore gas field set to go on stream within two months, he added.
Phase 11 of the field shared with Qatar will become operational in the next Iranian year (starting March 2022).
Khojastehmehr put the gas production capacity at around 1 billion cubic meters per day and said capacity could reach 1.5 bcm within 10 years.
Oil and condensate exports have increased in recent months, he added, without giving details.
The NIOC chief noted that an investment of $160 billion is needed for the dual expansion – with $90 billion for oil and $70 billion for gas – and it will be provided through foreign and domestic funds.
"We don't have any problem" raising the money after some funds have already been raised from private companies, he said.
"Once this investment is made, we will be ready to increase the refining and export capacity to 1.5 times higher than the pre-sanctions period."
Talks are ongoing between Iranian diplomats and world powers representatives in Vienna, Austria, to revive the 2015 nuclear deal from which the United States walked out under the presidency of Donald Trump. Iran wants all sanctions imposed by the Trump administration to be removed while it scales back its nuclear activities.
"We welcome foreign investment regardless of the sanctions and without any conditions," he said, adding that Iran has already started talks to develop oil and gas fields with foreign companies.
Khojastehmehr said Iran is discussing further ventures with Chinese companies that had already been involved in the development of Iran's southwest and oilfields shared with Iraq.
The companies include Sinopec and CNPC. China is Iran's largest oil customer.
Stressing that Iran is seeking new buyers, Khojastehmehr said, "We seek to pin down new markets that should be stable and secure to continue our oil sales. We should be able to attract strategic customers. We are ready to sign even long-term contracts for the sale of crude oil, gas condensates, gas and oil products."
“South America is one of NIOC's markets. We seek to attract strategic customers ... Venezuela is one of these countries," he added.
The NIOC chief announced that Iran has decided to remodel the Iran Petroleum Contract, which is a 2016 refurbished formula by the previous Iranian government.
"Our plan is to improve the IPC to make it more attractive and remove its shortcomings," he said, adding that Iran will "soon" announce packages for investment by the downstream sector in the upstream.
"If our private refineries and petrochemical plants need feedstock, they should certainly spend a part of their profit to provide their own feedstock," he said.
Oil Products Account for Lion’s Share of ‘Non-Oil’ Exports
Recent data released by the Ministry of Industries, Mining and Trade show petrochemicals and gas condensates accounted for over half of the value of Iran’s so-called “non-oil exports” during the first five months of the current fiscal year (March 21-Aug. 22).
Iran’s total “non-oil exports” stood at 45.5 million tons worth $17.6 billion in the five-month period, registering a 19.61% and 62.31% growth in weight and value YOY respectively.
The ministry data show around 90% of total “non-oil exports” during the period in terms of weight and 80% in terms of value were in fact petrochemical products, gas condensate and mineral products.
The “non-oil” category often used in Iran’s customs data refers to exports of all commodities, except crude oil.
The Ministry of Industries, Mining and Trade’s dataset on exports are divided into five main sectors, namely “Petrochemicals and Gas Condensate”, “Mines and Mining Industry”, “Agriculture and Food Industries”, “Carpet and Handicrafts” and “Other Industries”.
Petrochemicals and gas condensate exports hit 22.88 million tons worth $9.13 billion, 24% and 74.8% higher in terms of weight and value respectively year-on-year.
“Mines and Mining Industries” exports stood at 17.8 million tons worth $5 billion, registering a 16.3% and 127.9% growth in weight and value respectively YOY.
The data show 50.31% and 39.14% of total non-oil exports’ weight and 51.89% and 28.42% of the value belonged to “petrochemicals and gas condensate” and “mines and mining industries” respectively.
Moreover, 7.22% and 10.72% of total exports’ weight and value respectively belonged to “agriculture and food industries” as the group’s exports hit 3.28 million tons (up 7.3% YOY) worth $1.89 billion (down 11.2% YOY) during the period.
Around 3.32% of total exports’ weight and 8.65% of total exports’ value belonged to “other industries”. Exports in this category hit 1.51 million tons (up 15.2% YOY) worth $1.52 billion (up 23.1% YOY).
“Carpet and handicrafts” had the lowest share of total exports as 0.02% of total weight and 0.33% of total export value belonged to this group.
The sector’s exports stood at 7,000 tons (up 16.7% YOY) worth $58 million (down 7.9% YOY) in the five months under review.
Iran registered $1 billion in non-oil trade surplus in the first five months of the current fiscal year (March 21-Aug. 22), according to Mehdi Mirashrafi, the head of the Islamic Republic of Iran Customs Administration.
Iran’s total foreign trade hit 59.3 million tons worth $34 billion during the period, registering a 14% and 38% growth in weight and value respectively year-on-year, the news portal of IRICA reported.
Non-oil exports stood at 45.5 million tons worth $17.66 billion, registering a 20% and 63% growth in weight and value respectively compared with the corresponding period of last year.
The exports mainly included methanol, natural gas, polyethylene, semi-finished iron products, iron ingots, gasoline, liquid propane, iron pipes, urea and petroleum bitumen.
The top five destinations of Iranian exports were China with 12.3 million tons worth $5.9 billion, Iraq with 12 million tons worth $3.16 billion, the UAE with 5 million tons worth $1.9 billion, Turkey with 1.37 million tons worth $1.1 billion and Afghanistan with 2.16 million tons worth $885 million.
Imports stood at 13.8 million tons worth $16.63 billion from March 21 to Aug. 22, registering a 5% decline in terms of weight but a 21% growth in terms of value YOY.
The top 10 imported goods and products were cellphones, corn, soybeans, sunflower oil, barley, wheat, soymeal, palm oil, sugar and carbon electrodes.
