Low oil price to not impact Iran’s oil industry projects
Baku, Azerbaijan, Nov. 6
By Umid Niayesh - Trend:
The oil price on the international markets has dropped by 25 percent since June, however, the Iranian government does not intend to appeal to OPEC to hold an emergency meeting.
OPEC member countries produce approximately one third of global oil output.
OPEC oil basket price fell to $78.11 per barrel on Nov.5, while this figure was about $108 in mid-June.
Responding a question about the probable impact of lowering oil price on the prospect of Iran's upstream projects, Hooman Peimani, a research fellow at the Asia Pacific Energy Research Center told Trend on Nov.6 that while Iranian oil and gas industry faced low investment for the last three decades, the current price lowering will not have any serious impact on the issue.
Iran is number one in term of gas reserves and forth oil holder in the world. It's oil and gas reserves are estimated at 157 billion barrels and 33.6 trillion cubic meters respectively, but the country suffers from low investment, sanctions and withdrawal of giant companies from its upstream oil and gas sector, which has led to gas shortage on winter and falling oil exports significantly.
Iran was exporting 2.5 million barrels of oil in 2011, but after Western sanctions were imposed in mid-2012, its oil exports dropped to 1.07 million barrels per day in 2013.
The country has not been able to commission any new oil field since 2007, according to the U.S. Energy Information Administration's report.
Peimani says that if oil prices remain within an 80-dollar range, Iran's oil revenue will decrease to leave less money for the Iranian upstream and downstream projects, however low investment has been a feature of the Iranian oil and gas industry for the last three decades as the bulk of the oil generated revenue has funded the Iranian budget.
Iran's yearly budget heavenly depends on oil export revenues.
According to OPEC's annual report Iran's GDP in 2013 was a little more than $366 billion, while its value of petroleum export and total export were $61.2 and $98.8 billion, indicates a huge share of oil exports in the country's economy and budget.
Peimani says that many projects have not been implemented or partially implemented during the last years due to lack of sufficient investment.
"As a result I do not foresee a major impact of the current price-lowering trend on the Iranian oil industry's up and downstream projects", Peimani explained.
While commenting on the future of the oil prices he said that the lowering of oil prices will not last for a long time.
"Oil consumption will likely increase in the coming winter to increase the global demand for oil and push up prices," he said.
It should be noted that the global crude oil prices continue to swiftly fall on the world markets.