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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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Iranian Oil Minister Calls OPEC Production Freeze ‘A Joke’

Iranian Oil Minister Calls OPEC Production Freeze ‘A Joke’

Iran has already increased oil exports by 500,000 barrels per day since sanctions have been lifted, and now it’s looking at an additional 250,000 bpd when it ups production in another oil field by the end of this year.

Iranian Minister of Petroleum Bijan Zangeneh has said that the country plans to raise crude oil production from the North Azadegan oil field by 250,000 barrels per day by late 2016, according to Iran’s official Petro Energy Information Network, Shana.

Development is now nearing completion and production has already begun, and the increase in production will occur in multiple phases.

The Azadegan oil field is on the Iran-Iraq border, and the two countries share this field, which holds an estimated 5.6 billion barrels of reserves. Production is expected to increase by 150,000 after the completion of the first two phases, and then to ramp up to 250,000 thereafter.

Zageneh has also said recently that Iran is planning to reach a daily crude oil output of 4.6 million barrels under its 6th five-year development plan from 2016 to 2021. But this development requires some $40 million in investment if it is to be realized. Related: Glut Worsens as U.S. Oil Storage Levels Rise Again

By the end of the previous five-year plan, which began in 2011, Iran will have boosted output of oil and condensates to 5.3 million barrels per day, 3.3 million barrels of which will be processed at home.

According to the Iranian oil minister, some 75 percent of the country’s output currently comes from eight to nine mature fields whose production is declining.

Iran’s natural gas output is also set to rise, with the ministry targeting 1.1 billion cubic meters per day by the second quarter of 2018. All phases of the supergiant South Pars gas field, which it shares with Qatar, are scheduled to be online by the end of this year. According to Iranian officials, this would put Iran’s gas output above Qatar’s. For gas exports, it’s targeting primarily Iraq, gas-starved Pakistan and Oman, among others.

Finally, Iran is expecting to sign up to $15 billion in new petroleum contracts by 2017, according to the managing director the National Iranian Oil Company (NIOC), Rokneddin Javadi. Related: 35% Of Public Oil Companies Could Face Bankruptcy

Iran’s plans to increase production by the end of the year again lend more perspective to the output freeze proposed earlier. Zangeneh has since called the output freeze ‘’a joke’’.

“Some countries that are producing above 10 million barrels per day (bpd) have called on Iran to freeze its production at one million bpd,” Zangeneh was quoted by Press TV as saying, with the Iranian news agency hinting that it was a clear reference to Iran’s nemesis, Saudi Arabia.

“This is more like a joke that they tell us they would freeze their production above 10 million bpd and that we should also in turn freeze our production at one million bpd,” he told an energy panel in Tehran. Related: A Home-Battery System that Could Rival Tesla

At a Doha meeting early last week, two of the world’s largest producers—Saudi Arabia and Russia—along with Venezuela and Qatar agreed to freeze oil output at January levels in order to stabilize the market. It was a lackluster deal that required other major producers to follow suit.

Earlier this week, Iran rejected any possibility that it would freeze output to January levels, though it initially said it supported the plan but would not commit to a freeze itself.

By James Burgess of Oilprice.com

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