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Iran plans to increase the production capacity of its oil fields by 400,000 bpd, state news agency Irna reports, quoting National Iranian Oil Company’s deputy head Gholamreza Manouchehri.
Russia’s Gazprom will take part in this plan by developing two fields, Azar and Changuleh, Manouchehri also said, as quoted by Reuters, adding that NIOC was currently in talks with the Russian firm.
The official also dismissed reports that the development of the huge South Pars gas field had stopped after the pull-out of French Total following the reimposition of U.S. sanctions on Iran.
“This claim that the development of phase II of the South Pars field has been stopped because of Total is not correct and everything is going according to plan,” the official said. Earlier, Iranian sources had said Total’s Chinese partner in South Pars, CNPC, is ready to take over the French company’s share of the project if it quits after pressure from the sanctions.
Iran has a goal of raising its crude oil production to 4.2 million bpd, but it is against the major increase in OPEC production proposed by Saudi Arabia and Russia. In fact, last week Iran said it would veto any substantial increase in oil production across the cartel, and will rely on the support of Iraq and Venezuela.
Now, sources close to OPEC say there are discussions of a more modest increase—about 300,000 bpd to 600,000 bpd—to appease the opponents. To compare, Russia is in favor of a 1.5-million-bpd production hike, which is just 300,000 bpd less than the total cut agreed to by OPEC and its partners in 2016.
Bloomberg notes in a report on the information that not all OPEC members would be able to increase production, regardless of the size of the increase. Venezuela is an obvious example, but Mexico and Angola also lack the spare capacity to start pumping more. So, if a production increase is approved and distributed proportionately, not all of the additional production will reach the market—provided, of course, that everyone stays within their new quotas.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
Even with Russia’s help, it will take Iran a few years before it can add 400,000 barrels a day (b/d) to its production capacity.
Iran requires $150-$200 bn of investments and at least 5-10 years to repair the damage in its oil reservoirs dating back to the early 1970s when Iran’s oil production under the Shah jumped from 2 mbd to 6 mbd. Such volume of investments will be hard to come by with the re-introduction of US sanctions.
However, Iran is well-advised to focus its investments on developing its huge proven reserves of natural gas, the biggest in the world, as future income from gas exports will overtake oil’s to become the major source of income.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London