Iran expects disruption in its oil industry after the reintroduction of U.S. sanctions that would make it hard to stick to its current production goals, Oil Minister Bijan Zanganeh said over the weekend, when he met with EU’s Climate Action and Energy Commissioner Miguel Arias Canete.
Iranian state news agency Shana quoted Zanganeh as saying achieving its stated daily production target of 4.2 million barrels of crude would be “difficult but we would not put that aside. It might take more time, but we will not do away with it.”
Iran would probably rely mostly on its two biggest buyers, China and India, to boost its production closer to this target, but it would also need the help of the European Union, which is also a big buyer of Iranian crude.
"I believe if the EU helps us and honors its statements, the level of Iran's oil exports will remain intact and this would not be a reason for changing a decision made in the past," Zanganeh said.
China and India, as well as the EU, have clearly indicated they had no intention of changing their buying habits regarding Iranian crude, with the EU specifically signaling it would make an effort to uphold the Iran nuclear deal and shield companies doing business in the country from U.S. sanctions. Related: Is $70 Oil Enough For Shale Drillers?
Still, Tehran is looking for backup plans: China’s CNPC, which partnered with French Total on the Phase 11 development of the South Pars gas field, has already said it was ready to take over the French company’s share of the project should it be forced to leave it if the U.S. Treasury does not grant it a sanction waiver.
As part of EU’s efforts to continue doing business with Iran, the European Commission said last week in a statement that "The commission is encouraging member states to explore the possibility of one-off bank transfers to the Central Bank of Iran. This approach could help the Iranian authorities to receive their oil-related revenues, particularly in case of U.S. sanctions which could target EU entities active in oil transactions with Iran."
By Irina Slav for Oilprice.com
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