Iran has discovered a new oil field with reserves estimated at more than 50 billion barrels, President Hassan Rouhani said, adding the reserves from the field will be added to the country’s total, which is currently 150 billion barrels.
“I am telling the White House that in the days when you sanctioned the sale of Iranian oil and pressured our nation, the country’s dear workers and engineers were able to discover 53 billion barrels of oil in a big field,” Rouhani said.
The Iranian president did not go into details about how fast the field will begin to be developed. Right now, Iran is having enough trouble selling the oil it already produces abroad because of the U.S. sanctions, and this will soon enough force it to start reducing production—if it has not started already—as storage capacity fills up.
At 53 billion barrels, this discovery would come in as the largest in quite some time, certainly the biggest this year.
According to OPEC’s latest Monthly Oil Market Report, Iran pumped 2.16 million barrels daily in September, down by 34,000 bpd from the previous month. This is also down from an average of 3.55 million bpd in 2018 and 3.81 million bpd in 2017.
Despite U.S. sanctions, however, Iran is finding ways to export its crude, using ship-to-ship transfers at sea, where the crude is offloaded from the large tankers onto smaller vessels and delivered to the coast. Related: Why Oil Companies Aren't Evil
Meanwhile, the country has restarted its uranium enrichment program: the program that led to international sanctions against Iran and, ultimately, to the so-called Iran nuclear deal that the United States withdrew from last year.
According to the latest update from Tehran, the country can now enrich uranium to 60 percent. This, Reuters noted in a report, is a lot more than necessary for civilian use but 30 percent short of the grade of enrichment needed for nuclear weapons. The country’s Supreme Leader Ayatollah Ali Khamenei has rejected the idea that the uranium enrichment’s goal is weapon-grade uranium. However, most see the resumption of enrichment as a way to pressure the European signatories to the nuclear deal into finding a way around U.S. sanctions.
By Irina Slav for Oilprice.com
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The 53 bb discovered are at this stage only oil initially in place (OIIP) until an assessment is made about how much of the resources could be recovered by current technology and proven. The global recovery factor (RF) average is 34%-35% meaning that only 18.0-18.5 bb could be proven in the best of circumstances. A case in point is the Iranian Azadegan oilfield which was estimated to hold more than 25 bb of reserves when it was discovered 20 years ago and ended up having only 5-6 bb of recoverable reserves. It was supposed to go on stream in 2012 but it is still languishing behind undeveloped.
Still, the Khuzestan province in southwest Iran where the new oilfield was discovered is not far from the border with Iraq and is known to be very rich in hydrocarbons. Not far from that area, Iraq discovered in 1975 the super-giant Majnoon oilfied located 60 km from Basra in Southern Iraq. Majnoon is one of the richest oilfields in the world with an estimated 11 mbd of proven reserves. The field was named Majnoon which means crazy in Arabic because of the excessive amount of oil in a dense area.
At the best Scenario, the new discovery would boost Iranian proven reserves by 18-18.5 bb. However, I hasten to add that the claim by Iran that it has 156.6 bb of proven reserves is very highly overstated. Two retired National Iranian Oil Company (NIOC) experts: the late Dr Ali Samsan Bakhtiari and Dr Ali Muhammed Saidi, estimated Iran’s proven reserves in 2006 at 36 bb and 37 bb respectively. Deducting Iran’s production since 2006 reduces total reserves to 25 bb and 26 bb respectively. My own calculation of Iranian reserves came to only 24 bb.
It will take Iran more than 10 years and billions of dollars to translate the discovery into production. Still, in the long term it will have a positive impact on the Iranian economy from the point of offsetting the steep depletion in Iran’s existing reserves and also maintaining oil revenue.
However, Iran’s future strategy is based on developing its huge natural gas reserves which will eventually be main export source.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London