Iran’s oil production to rise as sanctions lifted – EIA

The lifting of nuclear-relatd sanctions, which limited its ability to sell oil on the global market for more than four years, will lead to an increase in Irainian oil produciton and exports, the U.S. Energy Information Administration (EIA) said in a report.

Iran’s crude oil production has been relatively flat over the past three years while sanctions were in place, averaging 2.8 million barrels per day (b/d) in 2015, representing 9 percent of total crude oil production from the Organization of the Petroleum Exporting Countries (OPEC), it said.

In EIA’s January Short-Term Energy Outlook (STEO), which assumed sanctions to be lifted this quarter, Iran’s annual average crude oil production is forecast at 3.1 million b/d in 2016 (10% of projected total OPEC production), and almost 3.6 million b/d in 2017.

Consistent with these forecasts for average annual production, Iran’s crude oil production reaches 3.3 million b/d at the end of 2016 and 3.7 million b/d at the end of 2017. EIA estimates a subjective uncertainty range of +/- 250,000 b/d surrounding these year-end projections, with actual outcomes dependent on Iran’s ability to mitigate production decline rates, deal with technical challenges, and bring new oil fields into production.

“Most of Iran’s forecast production growth comes from Iran’s preexisting crude oil production capacity that is currently shut in, while the remainder comes from newly developed fields,” the report said.

It said Iran has a number of new oil fields that Iranian and Chinese companies have been developing over the past several years, which have the potential to add 100,000 b/d to 200,000 b/d of crude oil production capacity by 2017. The STEO forecast also accounts for production declines at Iran’s mature oil fields, the report said.

Beyond crude oil, Iran’s condensate and natural gas plant liquids (NGPL) production is currently almost 750,000 b/d, of which 75% is condensate and the remainder NGPL. Iran’s non-crude liquids production has grown over the past few years. The main buyers of Iran’s non-crude liquids have been in countries in Asia, mainly China, and the United Arab Emirates (UAE).

The report said Iran’s non-crude liquids production is expected to grow by 150,000 b/d by the end of 2016 and by an additional 100,000 b/d by the end of 2017, as more project phases at the South Pars natural gas field come online.

More than 80% of Iran’s condensate production comes from the South Pars field located offshore in the Persian Gulf, which is Iran’s largest non-associated gas field, the report said, adding that lack of foreign investment and insufficient financing, stemming from international sanctions, have slowed the development of South Pars.

“With Iran’s petroleum and other liquid fuels consumption expected to remain flat over the next two years, crude oil and other liquid fuels from the production increase is likely to be sold in export markets,” the reprt said.

The pace that Iran will ramp up its exports now that sanctions are lifted is uncertain. Iran has a considerable amount of oil stored offshore in tankers (between 30 and 50 million barrels), most of which is condensate, and crude oil stored at onshore facilities. Initial post-sanction increases in Iranian exports will most likely come from storage, while meaningful production increases will occur after some of the storage is cleared, it said.

 

Leave a Reply

Your email address will not be published.