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Subsidiaries of the National Iranian Oil Company (NIOC) signed on Tuesday agreements with Iran-based companies aimed at maintaining and increasing the production capacity of nine ageing oil and gas fields in deals worth a total of US$1 billion, the Iranian oil ministry’s news service Shana reported.
The agreements signed today are part of a wider plan to have 33 projects for enhancing the production capacity at Iranian oil and gas fields. The 33 projects will be worth a total of US$6 billion in three years, Shana reports.
According to S&P Global Platts, the nine deals signed on Tuesday are expected to add nearly 90,000 bpd to Iran’s production capacity within the next three years, while the 33 projects are designed to raise Iran’s production capacity by 281,000 bpd.
Iran’s capacity may be increased, but its oil production and exports are currently limited by the U.S. sanctions that returned in early November.
According to OPEC’s secondary sources, Iran’s crude oil production plunged by 159,000 bpd from November to 2.769 million bpd in December. In the third quarter of 2018, before the U.S. sanctions were re-imposed, Iran’s crude oil production averaged 3.603 million bpd.
Before the sanctions, Iran was OPEC’s third-largest producer after Saudi Arabia and Iraq, while in December, as per OPEC’s sources, the Islamic Republic was only fifth, after Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Kuwait.
At the signing ceremony for the deals to boost Iranian production capacity, Iran’s Oil Minister Bijan Zanganeh said that “We wanted to create projects only for Iranian contractors.”
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“We wanted to raise hope among local companies as [the US] wants to cause worry and upset Iranian people by the sanctions,” Platts quoted Zanganeh as saying.
Iran will not be complying with the “fully illegal” U.S. sanctions, Zanganeh said earlier this month, in yet another defiant statement from Tehran after the American sanctions on Iran’s oil and shipping industry snapped back.
While it stays under U.S. sanctions, Iran will not be discussing the volume or the destination of its oil exports, the Iranian oil minister noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.