Baku, Azerbaijan, Feb.13
By Leman Zeynalova – Trend:
Two trends could open the way to more oil production and exports from Iran and some other countries between about 2019 and 2022, Francis Perrin, Senior Fellow at the OCP Policy Center (Rabat) and Senior Research Fellow at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.
The first factor, according to the expert, is that the production of several mature fields throughout the world is on a downward trend and new fields have to come on stream in order to make up for this loss of supply.
“The second issue is the fall in upstream oil investments by the oil companies following the fall in oil prices which began in the summer of 2014. Less investment in 2015 and 2016 could mean a reduction in world oil supplies around 2020,” he added.
Earlier, deputy Oil Minister of Iran Amir Zamaninia told a conference in Paris that the country aims to raise its crude output capacity to 4.7 million barrels per day within the next four years.
“We are striving - to be very cautious and not ambitious - for the next 3, 4 years we are planning to increase our production by about 700,000 taking our production to 4.7 million bpd,” Reuters reported Zamaninia as saying.
Perrin recalled that between 2015 and 2017 Iran's crude oil production went up from 2.8 million barrels per day to 3.8 million b/d (annual averages).
“This rise is the consequence of the partial lifting of sanctions in January 2016 further to the signing of the agreement on the country's nuclear program in July 2015, the Joint Comprehensive Plan of Action (JCPOA),” he said.
It was the first stage of Iran's oil strategy which provided for a 1 million b/d increase in its crude production in a short-term period, the expert explained.
The following step, in a mid-term horizon, is to reach a higher level, between 4.5-5+ million b/d according to various statements by Iranian officials.
“The Iranian Oil Minister Bijan Namdar Zanganeh, and the National Iranian Oil Company (NIOC) explain that present OPEC quotas, decided at the end of 2016, are a short-term answer to the fall in oil prices between the summer of 2014 and 2016. In the medium-term larger oil volumes will be required due to the growth in world population, economic growth and industrial development in emerging and developing countries. It is thus not contradictory to respect OPEC quotas in the short-term (until the end of 2018 according to the organization's latest decisions) and to ramp up output in the medium-term,” noted Perrin.
He pointed out that this reasoning is quite logical, but it will be a real challenge for OPEC to deal with the willingness of two of its member states, Iran but also Iraq, to increase their oil production and exports in a very significant way.
“Among non-OPEC countries Kazakhstan, with the huge Kashagan field, Brazil, with its deep offshore subsalt potential, and of course the United States, with its shale and tight oil reserves, will also have the capacity to put more oil in the market in the coming years and all of this could exert a bearish impact on oil prices,” said the expert.
OPEC and several other non-OPEC producers have reached an agreement to extend the production deal for a further nine months. This would shift the expiration date of the agreement from March to the end of 2018. The agreement is on the same terms as those agreed in November 2016.
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