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The Future Of OPEC Is Underground

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Iranian Expected To Export New West Kharoon Crude By End Of 2016

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Iran’s aim to reach pre-sanction oil production levels could receive a welcome boost according to comments made by a senior official at the National Iranian Oil Company (NIOC) to the Reuters news agency.

Seyed Mohsen Ghamsari, director for international affairs at the state-controlled NIOC, expects construction of facilities near Kharg Island in the Gulf to be finalized “sometime by the end of this year.” Ghamsari added that the NIOC anticipates exporting a new grade of crude called West Kharoon once construction of the pipeline and Kharg Terminal are complete.

Initial output from the finished facility is expected to reach nearly 300,000 barrels per day (bpd), and will likely help Iranian production that Ghamsari said is currently at around 3.8 million bpd and might reach 4.0 million bpd in a few months.

“We are ready to negotiate the level of production as soon as we come back to the production before sanctions,” Ghamsari stated. He noted that output was a little higher than 4 million bpd prior to the sanctions that were removed earlier this year over Iran’s controversial nuclear program.

Seyyed Pirouz Mousavi, Managing Director of Iran Oil Terminals Company (IOTC), explained to the Mehr News Agency last week that four new tanks at the Kharg Terminal are anticipated to be in service later this month; thus, boosting crude storage capacity at the Gulf port of Genaveh by 10 million barrels.

“The total volume of storage capacity in Kharg Oil Terminal has now reached 28 million barrels,” noted Mousavi, who added that increased investment from the private sector has been made in the building of new storage tanks.

The Iranian government previously claimed that it would support a proposal by some OPEC members to freeze oil supplies as soon as the country returns to pre-sanction output levels. In this regard, the anticipated export boost of West Kharoon will help support Iran’s aim within OPEC.

Related: Is Putin’s Support For An OPEC Freeze A Game Changer?

Since sanctions were lifted in January, Iran’s crude exports to key markets in Europe and Asia have risen sharply but are expected to level off this month.

West Kharoon purportedly is of similar quality to Iraq’s Basra Heavy crude, with an API gravity of between 22 and 26 degrees and a sulfur content above 2 percent. The crude blend was originally scheduled to be introduced to the market earlier this year.

By Erwin Cifuentes for Oilprice.com

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