Page 51 - IRANRptJul22

Iran maintains oil, gas expansion push
reached pre-sanctions levels.
Iran uses discounts and grey market tactics aimed at avoiding sanctions enforcers to encourage buyer nations to keep accepting its crude oil shipments. China is its main market. Washington is widely seen as presently and largely standing off on sanctions enforcement on Iranian oil sales given that Iran and the US are currently attempting to successfully complete the Vienna talks to relaunch the 2015 nuclear deal, or JCPOA.
If a JCPOA reinstatement, which would involve the lifting of US economic sanctions on Tehran, could be achieved, Iran would be expected to quickly pick up many more ready buyers of its crude because various countries are boycotting Russian oil shipments in response to Russia's invasion of Ukraine.
Tehran is proceeding with efforts to expand oil and gas production capacity as it works towards ambitious targets.
What: Iran this week announced progress on increasing oil capabilities while kicking off efforts to add to gas flows.
Why: The country aims to reach 5.7mn bpd of oil capacity by the end of the decade while hiking gas output to 1.5 bcm per day.
What Next: Expansion to these levels will require upwards of $200bn, though with less than 5% of this so far sourced and the country’s downstream also requiring investment, there are significant question marks about whether the targets will be met.
In an otherwise quiet week in Middle Eastern oil and gas markets, Iran maintained its upstream momentum as it seeks to increase production of both oil and gas.
While the outlook for the Islamic Republic on the world stage remains uncertain as talks with international powers stall, Tehran is focused on increasing oil output for sale on global markets and more gas is required to feed the downstream and satisfy peak demand at home and in neighbouring Iraq.
South oil
A subsidiary of the National Iranian Oil Co. (NIOC) has said that it has ramped up oil production by 600,000 barrels per day (bpd) in the eight months since the administration of Ebrahim Raisi came to power.
Speaking to the official Islamic Republic News Agency (IRNA, Alireza Daneshi, CEO of the National Iranian South Oil Co. (NISOC), said that conditions prior to Raisi entering office were unfavourable, with oil production only sufficient to provide feedstock for domestic refineries.
However, he said that following a request from the Raisi administration, NISOC had modified its oil production plan, the implementation of which has led to the increase.
However, given that the latest data from OPEC, which were released last week, show that Iranian oil production has risen from a 2021 average of 2.4mn bpd to 2.55mn bpd as of March, it appears that Daneshi’s comments were addressing crude production capacity rather than actual output.
This aligns with a statement from the country’s Minister of Petroleum Javad Owji, who said last week: “The current oil production capacity has reached the pre-sanctions era, meaning the daily figure of over 3.8mn barrels.”
A recent report from the Ministry of Petroleum (MoP) said that the country had achieved a capacity of 3.838mn bpd in 2018 before the US withdrew from the Joint Comprehensive Plan of Action (JCPOA).
51 IRAN Country Report July 2022 www.intellinews.com