Acting oil minister Gholamhossein Nozari believes ‘there is enough oil in the market but if statistics and data show there is a need to produce more we are capable of meeting that demand.’
Pump it up
According to Nozari, Iranian crude production reached 4.1 million barrels per day (bpd) in September and could reach 4.2 million bpd by next March, with extra production coming from the country’s Azadegan, Darkhovein and Bahregansar fields. These fields are said to have been developed mainly with local expertise.
Whether barriers to western investment will put a long-term brake on further development in Iran’s oil and gas sector remains to be seen. Nevertheless, France’s Total and Anglo-Dutch giant Royal Dutch Shell have been given an eight month deadline to finalise gas deals or the South Pars project will go ahead without them, according to Pars Oil and Gas Company head Ali Vakili.
Iran meanwhile is courting less traditional investors. In October, President Mahmoud Ahmadinejad and Russia’s President Vladimir Putin agreed on the participation of Russian companies in developing Iranian oil and gas fields, including the South Pars gas field.
Recent moves also involve an Iranian deal with Oman to develop the offshore Hengum oilfield which could be producing 16,000 bpd of oil and 40 million cubic feet per day of gas by the middle of 2008.
In addition there are plans for a Venezuelan-Iranian oil and gas company to be established offshore to focus on opportunities in countries such as Venezuela and Bolivia where established majors are facing operational difficulties.
But Iran needs much more than incremental increases in oil production. Depletion, aggravated by inefficiencies and a lack of investment, has seen Iranian oil production decline steadily from its pre-revolution peak of 6 million bpd to its present level, barely reaching its Opec quota.
Some 40 per cent of its petroleum is needed for domestic use and even then huge amounts of refined fuel have to be imported from the UAE, France, the Netherlands and India. Iran’s consumption of cheap unlimited petrol was almost equal to that of China before rationing was introduced in June.
Iranian motorists are now limited to 100 litres a month. However, the cuts are expected to result in $3bn worth of import savings over the current financial year.
Officials say that the country will produce sufficient gasoline to meet domestic requirements by 2009 and then it will start to export fuel a year later as a result of doubling refining capacity from 1.65 million bpd to 3.3 million bpd. This depends though on a number of planned new refineries being commissioned on schedule.
Nozari declares defiantly: ‘The international message is that Iran is determined to press ahead with the implementation of its projects regardless of what others decide to do. Foreign companies still have the opportunity to work in Iran, but any delay on their part will mean that they will miss out on the opportunity.’