Iran’s oil minister Mohsen Paknejad said that, if the US sanctions are lifted, the OPEC member could significantly boost its crude output to near 2015 levels within a year.
“Our oil production comes with a potential capacity. Naturally, after the openings take place and when some restrictions are lifted, some of this capacity will become actual. This volume can bring us to the pre-sanctions era,” Paknejad told reporters.
When asked if he meant a level of 3.8 million b/d, Paknejad refused to specify.
Iran’s crude oil production was 3.23 million b/d in March, according to the latest Platts OPEC+ survey by S&P Global Commodity Insights. It is exempted from OPEC+ production cuts.
He vowed that increasing oil output in a possible post-sanction era would occur within the shortest possible time.
“We have had this experience in 2015 under the Joint Comprehensive Plan of Action or the nuclear deal JCPOA. Back then, our colleagues could raise the production in the shortest time, within less than a year, l don’t name a figure but by a very much amount. This potential and capacity exists today,” he said. “God willing within less than a year.”
Speaking on the sidelines of an investment event, Paknejad also voiced confidence that plummeting oil prices amid positive vibes from Iran-US talks and returning back barrels from the voluntary cutters would not negatively impact Iran’s oil production increase plans.
“The oil prices follow diverse variables. Focusing merely on one single variable as the only factor impacting the oil price is not a very appropriate conclusion… there are demand and supply in different seasons under different conditions,” Paknejad said.
“… a part of the voluntary production cut is due to return under a certain trend. This return of the cut productions will definitely be in accordance with the conditions of materialization of the agreed price by our colleagues in OPEC and OPEC+,” he said when asked about his view on the OPEC’s current policies.
The investment event on April 22 saw “unlocking investment and financing opportunities in NIOC projects” unveiling more than 200 projects worth over $135 billion. Iranian officials said the offers enjoy high flexibility and transparency regarding the contractual terms, alleviating investors’ concerns. Cutting protocols, shortening the time of negotiations to finalizing contracts to four months, tax initiatives, facilitation of investment, new finance methods and practical, transparent instruction are advantages of the oil ministry’s move.
Iran has always used a few contractual models, including three generations of buyback and a modified version called Iran Petroleum Contracts (IPC), which is closer to a service contract than a production-sharing deal.
“We are ready to even negotiate the type of the contracts,” the oil minister said.
Exploring key areas
Whether Iran would see the US oil companies in its energy sector, Paknejad said: “Regarding the usage of foreign companies and investors, we have no restrictions, only if they follow our conditions and obligations as a general rule.”
“As for the result of the Iran-US talks, it’s not like that we would hang on and wait for attraction of investment looking on the outside… We believe that we have capacities that we can converge and can definitely solve our problems looking inwardly,” he said.
A total of 83 oil and natural gas development projects alongside 23 exploration blocks with oil and gas in place at 193.875 billion barrels and 783 Tcf of natural gas were presented in the event. Five of the blocks lie in the Caspian Sea holding 191.8 billion barrels of oil and 738 trillion cubic feet of gas.
Five projects introduced by NIOC would increase crude oil storage by 7.7 million barrels.
Three of the offered projects would create new storage capacity in various oil companies and two others involve building a 238-km oil transfer pipeline.
Sanctions have made it difficult for Iran to access advanced technology to produce LNG. The main reason that Iran has not been able to build LNG facilities is that it cannot access LNG compressors under the sanctions. The state-run Pars Oil and Gas Co. has prepared an investment package for an annual production of 5.25 million mt of LNG.
National Iran Oil Refining Products & Distribution will present 24 investment projects in the refining industry. The investment offer at the Iranian Central Oil Fields Co. aims to develop gas plants with a processing capacity of 20 million cu m/d.
The other projects included 45 flare gas collection projects, 15 energy consumption optimization projects and 13 logistics projects for sustainable development.
Source: Platts