Page 13 - MEOG Week 04 2023

MEOG NEWS IN BRIEF MEOG

OIL contracts to domestic companies to revive IEA expects an inflection in
low-production oil wells in the country.
Iran’s oil exports surging Mohsen Khojasteh Mehr said on Tuesday that oil markets in 2023
CEO of the National Iranian Oil Company
under Malaysian banner around 750 low-production oil wells across The International Energy Agency (IEA)
Iran will be revived under the contracts signed reports that oil demand this year will grow by
Iran’s oil exports are reportedly surging thanks with dozens of small Iranian companies 1.9mn barrels per day, to a record 101.7mn
to shadow market barrels sent to China under earlier in the day. bpd, and supply by 1mn bpd, to 101.1mn bpd,
the banner of shipments from Malaysia. Khojasteh Mehr said reviving the low- in its first monthly report for 2023 released on
The official data show Malaysia as China’s production oil wells will help the NIOC to January 18. Russia’s federal budget is already
third-biggest provider of crude last month, boost its output by nearly 230,000 barrels per under pressure from tumbling oil and gas
behind only Saudi Arabia and Russia, but day (bpd) or around 83 million barrels per revenues but with a bit of luck a rise in oil
Malaysian exports to China on that scale are year. prices in the second half of this year could
unfeasible, noted Bloomberg on January 20, He said each company will be assigned to take some of the pressure off.
saying they were almost triple the average restoration works on a maximum of five low- The oil market has already been hit by
daily crude output from the Southeast Asian production oil wells as part of the contracts the oil price cap scheme and EU embargo on
nation over 9M22. signed on Tuesday. the import of Russian crude that went into
“China’s crude imports from Iran picked The announcement comes two months effect on December 5. It will receive a second
up to a new record in the last month of 2022,” after the NIOC denied rumors that it will blow when a similar two-speed embargo and
Armen Azizan, an analyst at Vortexa, said in use the services of Russian and Chinese price cap regime is introduced by the EU on
a report. It also noted that Iran - which has companies to revive low-production or February 5 that will further affect supplies.
to sell oil under the radar given US sanctions inactive oil wells in Iran. However, oil prices for Brent rose to $85 after
- exported 1.3mn barrels/day of oil in Authorities said at the time that Iran’s the IEA released its report on January 18.
November, and in December stayed near the PetroPark, an Oil Ministry company So far, the EU ban on crude has led to a fall
highest level seen in four years. responsible for innovation and technology in Russia’s exports of crude as international
Malaysian waters have long been used by projects, will supervise and coordinate works tanker companies shy away from Russian oil,
oil traders dodging sanctions by transferring by domestic startups and small companies on afraid of secondary sanctions. The discount on
crude and petroleum products from one low-production oil wells,Press TV reported. the Russian Urals blend of oil has also blown
tanker to another, sometimes disguising the Oil Ministry figures show reviving a low- out to almost 50% against the benchmark
origin. Barrels from Iran and Venezuela are production oil well costs around $1 million, Brent blend.
known to have been re-branded as oil from around 90% cheaper than developing a new However, analysts speculate that these
Malaysia and Oman before being shipped to oil well. changes in price and volume will be
China, the world’s biggest oil importer. The project is part of NIOC’s efforts to temporary while the market and Russia find
The records show that during last year boost its daily output and exports of crude new routes and customers for its oil products.
China imported 35.7mn tonnes of crude from oil despite US sanctions that have targeted A similar thing happened in the first months
Malaysia. Officially, China has only imported both Iran’s oil sales and its investment in of the war in Ukraine where Russian exports
oil from Iran four times since the end of 2020. development of new oilfields. fell as traders avoided buying the Urals blend
BNE Khojasteh Mehr said Iran seeks to reach and the discount increased then as well.
a daily oil output target of 5.7 million bpd by However, after a few months traders in Asia
Iran awards contracts to 2028. That comes as NIOC’s current output – in India and China in particular –
figure is at around 2.6 million bpd, down from
stepped in to buy the very cheap Russian oil
revive oil wells more than 3.8 million bpd reported by the driven by market forces. Analysts assume that
something similar will happen now, but where
company before the US imposed its sanctions
Iran’s state oil company the NIOC has on Iran in 2018. the export volumes and prices will settle
awarded some $500 million worth of MEHR remains a matter of debate.

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