Iran able to increase oil output by a few 0.1 mbpd after sanctions removed – expert
Baku, Azerbaijan, Apr. 14
By Dalga Khatinoglu - Trend:
The Iranian government has been saying it would give its oil export a big jump after international sanctions on its economy are removed.
Yet many experts say that doing so in a short time is impossible.
Iran and the P5+1 (the US, UK, France, Russia, China, and Germany) reached a nuclear framework agreement on April 2 that raised hopes for achieving a comprehensive nuclear deal by July 1 and lifting of economic sanctions on Iran, including the restrictive measures against oil export.
About 80 percent of Iran's oil wells are in their second half-life and are facing a fall in pressure, which leads to an output decline of 8 percent to 13 percent annually as a result, according to the U.S. Energy Information Administration (EIA).
In assessing Iran's ability in increasing its oil exports after the lifting of sanctions, certain issues must be taken into consideration, Hooman Peimani, Research Fellow at the Asia Pacific Energy Research Center, Tokyo told Trend on April 14.
"Iran's exports were halved in the second half of 2013 when the European extensive ban on Iranian oil imports was enforced. That resulted in shutting down of some of the fields, but not all as others were experiencing a lower production pace," Peimani said.
He pointed out that Iran's lowering oil production has been a process in place for a decade or so, partly a result of the recent sanctions and a lowering demand from its European customers even before the sanctions for political reasons prompting Iran to replace Europe with Asia as its main market.
It has also partly a result of Iran's lowering its domestic oil consumption by increasing its gas consumption for power generation, household usage and public transportation (gas-powered cars and buses), as Iran now has the world's largest fleet of CNG-powered cars, Peimani stated.
The expert further said that Iran's continued expansion of its gas production and consumption is decreasing its reliance on its existing oil production for domestic purposes to leave a growing amount of oil surplus for exports.
"While it is correct that some of the Iranian oil fields cannot be reopened quickly or their previous production levels cannot be restored right away, many others can, although it is not known to what extent, he went on to say," he stated when asked if Iran is able to resume production level from these fields as much as the levels in 2011.
In the meantime, Iran hasn't been able to maintain its fields in good condition due to shutting down the wells in these fields.
Asked if is it possible that some of fields have lost their profitability so far, Peimani said that some, but not all the unused or under-used Iranian oil fields have experienced low or no investment/maintenance.
"Hence, some of them can be quickly re-opened," he concluded.
He added that nonetheless, Iran has been gradually preparing for the lifting of the sanctions since it started its nuclear negotiations.
Hence Iran has an unused capacity to increase its exports significantly although not at the level of 2011 in a very short period of time. Its exact amount is not predictable, but perhaps, a few 100,000 barrels per day would be conceivable, Peimani observed.
Edited by CN