Baku, Azerbaijan, July 15
By Umid Niayesh - Trend:
Wood Mackenzie estimates Iran will be able to add 600,000 barrels per day (kb/d) to its oil production by the end of 2017 after lifting sanctions.
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries.
After several months of talks, on July 14, Iran and the P5+1 (US, Russia, China, France, UK, and Germany) announced a final accord, curbing Iran 's nuclear program in exchange for the lifting of most international sanctions.
Following the deal Wood Mackenzie released a report saying that returning Iran to oil markets wouldn't be easy.
Iran's oil and gas industry has been hit hard by waves of international sanctions set in 2010 and 2012 as the crude oil exports have halved to 1.1 million b/d, production has been curtailed by one million b/d.
The report, which was obtained by Trend, says it is not expected that Iranian crude will flood the market in the near-term.
Moreover, although Iran has around 20 million barrels of oil in storage, some of it is needed for operational reasons domestically and is therefore, not destined for export, the report said.
There is a great deal of uncertainty over whether there has been any degradation of the reservoirs or facilities while production has been shut-in. While well shut-ins may have increased reservoir pressure, it will be hard to quickly reverse the production decline rates experienced over recent years without additional gas re-injection or more enhanced oil recovery schemes, according to the report.
"Since the increase in Iran 's output will occur steadily rather than one sizeable step change up, we do not see a large-scale downward effect on oil prices. Our oil market view already includes an assumption that Iran 's sanctions would be fully lifted by mid- 2016."
The report further said that potential for investment in Iran is huge, three quarters of its combined oil and gas reserves - the third largest in the world - are yet to be produced.
"The country is expected to unveil new upstream fiscal terms in late 2015 and some IOCs and NOCs, including Shell, Total and Eni, are already eyeing opportunities."
Tehran is eagerly poised to attract foreign investment and gain access to modern technologies in the whole energy chain. However, it will take years for IOCs to gain access to projects and start having an impact on production capacity - even if fiscal terms are set at internationally competitive levels, the report said.
Edited by CN
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