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Since international sanctions have been lifted from Iran in early 2016. the country hasn’t missed a single opportunity to make ambitious announcements. This week was no different.
While attending the Congress (WPC)`>.World Petroleum Congress in Istanbul. Turkey. National Iranian Oil Company’s (NIOC) Oil and Gas Upstream Contracts Manager Reza Dehghan stated that Iran is expecting to boost its crude oil production to 4.8 million barrels per day and its natural gas output to 45 billion cubic feet per day over the next five years.
According to Mr. Dehghan. achieving these production goals is a top priority for Iran. However. the country can’t undertake it alone. Iran is looking for $140 billion in investments. The major OPEC player is expecting two thirds of said amount to come from foreign investors.
Overall. the plan sees Iran using these investments to produce 284 billion barrels of crude oil and 60 trillion cubic feet of natural gas.
Currently. Iran’s oil output stands at 3.8 million barrels per day. despite numerous statements that the country reached its pre-sanction production level of 4 million bpd. Iran is aiming to actually reach its pre-sanction production level by March 2018. which does look realistic. considering the country’s efforts to bring online additional minor oil fields in its oil-rich western provinces.
While Iran is free to boost its oil output to 4 million bpd. anything above that level comes into friction with the OPEC production cut agreement. However. with the things as they currently are. the agreement has been extended to March 2018. which is exactly when Iran expects to reach their highly sought after 4 million bpd.
If oil production cuts are not extended beyond March 2018. Iran would be able to boost its crude output even further. but then so would any other global producer currently limited by the agreement. including Russia and Saudi Arabia. which have the capacity to rapidly add an extra couple of hundred thousand barrels per day to global oil market that is still under pressure even after the introduction of supply cuts.
And one doesn’t have to be a Nobel Prize winner in economics to understand that its better sell 4 million barrels for $45 b than 4.8 million barrels for $25 b.
