15 July 2015, London – Iran has big ambitions to increase oil and gas production once sanctions are lifted but a substantial increase in exports is probably years away.
The country has the world’s fourth-largest proved reserves of crude oil (behind Venezuela, Saudi Arabia and Canada) and the largest proved reserves of natural gas (ahead of Qatar and Russia), according to BP.
It is the oldest major oil producer in the Middle East and output peaked at more than 6 million barrels per day (bpd) in 1974 (http://link.reuters.com/ryq25w). But decades of revolution, war and sanctions have cut production of crude and condensates to just 3.6 million bpd in 2014 (“BP Statistical Review of World Energy” 2015). In contrast, Saudi Arabia, Iran’s main rival, has raised liquids output from 8.6 million bpd in 1974 to 11.5 million bpd in 2014.
Sanctions imposed by the United States and the European Union amid concerns about Iran’s nuclear programme have hit Iran’s production and exports particularly hard.
Exports of crude and condensates have been cut from 2.6 million bpd in 2011 to 1.4 million bpd in 2014, according to the U.S. Energy Information Administration (“Under sanctions, Iran’s crude oil exports have nearly halved in three years” June 24).
Following the conclusion of the nuclear negotiations with the major powers, Iran hopes to raise oil production and exports significantly.
Oil Minister Bijan Zanganeh has stated the country will reclaim its former market share and could raise exports by 500,000 bpd immediately after sanctions are lifted and boost production to 4 million bpd in less than three months.
“We want to reach our pre-sanctions capacity,” the managing director of the National Iranian Oil Company (NIOC) said in a newspaper interview published on Wednesday.
“Iran’s oil production capacity was 4 million barrels a day before the sanctions. We can reach that if there is demand in the market,” he said.
Iranian officials have spoken of raising production to 5 million bpd or more over the longer term by attracting foreign investment and have opened preliminary discussions with international majors.
Even a small addition to production and exports could have a big impact on prices given the oversupplied state of the global oil market.