Page 4 - MEOG Week 15 2022

MEOG COMMENTARY MEOG

Iran maintains oil,

gas expansion push

Tehran is proceeding with efforts to expand oil and gas
production capacity as it works towards ambitious targets.

IRAN IN an otherwise quiet week in Middle Eastern oil Petroleum (MoP) said that the country had
and gas markets, Iran maintained its upstream achieved a capacity of 3.838mn bpd in 2018
momentum as it seeks to increase production of before the US withdrew from the Joint Compre-
WHAT: both oil and gas. hensive Plan of Action (JCPOA).
Iran this week announced While the outlook for the Islamic Republic on With Tehran setting a target of achieving
progress on increasing the world stage remains uncertain as talks with 5.7mn bpd of production capacity by the end of
oil capabilities while international powers stall, Tehran is focused on the decade, drilling work has ramped up across
kicking off efforts to add increasing oil output for sale on global markets the country, with the National Iranian Drilling
to gas flows. and more gas is required to feed the downstream Co. (NIDC) and other drillers keeping busy.
and satisfy peak demand at home and in neigh- The state firm recently reported that it had
WHY: bouring Iraq. drilled 75 wells during the year running March
The country aims to reach 2021-March 2022.
5.7mn bpd of oil capacity South oil Some of the most important were those
by the end of the decade A subsidiary of the National Iranian Oil Co. drilled at South Azadegan in the West Karoun
while hiking gas output to (NIOC) has said that it has ramped up oil pro- oilfield cluster in NISOC’s area of operation.
1.5 bcm per day. duction by 600,000 barrels per day (bpd) in the Production from the field is understood to be
eight months since the administration of Ebra- around 140,000 bpd, though field development
WHAT NEXT: him Raisi came to power. efforts are ongoing to raise output to 320,000
Expansion to these levels Speaking to the official Islamic Republic bpd in the first phase, with a second phase add-
will require upwards News Agency (IRNA), Alireza Daneshi, CEO ing another 280,000 bpd under the management
of $200bn, though with of the National Iranian South Oil Co. (NISOC), of NIOC subsidiary Petroleum Engineering and
less than 5% of this said that conditions prior to Raisi entering office Development Co. (PEDEC).
so far sourced and the were unfavourable, with oil production only The broader Azadegan deposit is home to
country’s downstream sufficient to provide feedstock for domestic around 32bn barrels of oil in place (OIP) across
also requiring refineries. the Sarvak, Kazhdomi, Godvan and Fahilan
investment, there are However, he said that following a request layers, Azadegan is Iran’s largest oilfield and is
significant question from the Raisi administration, NISOC had mod- split into two development projects – South and
marks about whether the ified its oil production plan, the implementation North. The giant reservoir is shared with Iraq,
targets will be met. of which has led to the increase. where it is known Majnoon (Insane) on account
“Whenever the administration instructs, we of its size.
can quickly return to the pre-sanctions produc- The expansion of South Azadegan is part of
tion levels; we have seen a decline in downhole wider efforts by NIOC to increase output capac-
activities over the past 15 years, but now the sit- ity throughout West Karoun, which currently
uation is favourable and although the problems produces a combined 420,000 bpd across mul-
have not been completely resolved, the situation tiple major assets including Darkhoein, Yadav-
is improving,” he added. aran, North & South Yaran.
However, given that the latest data from NIOC has identified $8bn worth of projects
OPEC, which were released last week, show in the area, noting last year that $11bn would be
that Iranian oil production has risen from a required as it targets an additional 580,000 bpd
2021 average of 2.4mn bpd to 2.55mn bpd as of from West Karoun’s 67bn barrels of OIP towards
March, it appears that Daneshi’s comments were the 2030 capacity target. Of this funding, at least
addressing crude production capacity rather $4bn will be provided by the headquarters for
than actual output. Execution of Imam Khomeini’s Order (EIKO),
This aligns with a statement from the coun- the Mostazafan Foundation, the government
try’s Minister of Petroleum Javad Owji, who said and Iranian banks.
last week: “The current oil production capacity
has reached the pre-sanctions era, meaning the Gas expansion
daily figure of over 3.8mn barrels.” Meanwhile, Owji said this week that work has
A recent report from the Ministry of begun to expand capacity across the country’s

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