Extension of OPEC deal favors Iran technically
Baku, Azerbaijan, Apr. 19
By Dalga Khatinoglu – Trend:
Iran was allowed in November 2016 to increase its oil output by 90,000 barrels per day (b/d) in 1H2017 to 3.797 mb/d, based on OPEC’s oil cut deal.
Other OPEC members had to decrease output by 4 percent to 1.2 mb/d, compared to October output, while Libya and Nigeria were exempted from cut.
Oil price in 1Q2017 increased by 56 percent, compared to the same period last year as the OPEC compliance was 82 percent, 94 percent and 95 percent in three months of current year and the compliance of eleven Non-OPEC producers to cut 558,000 b/d was about 60 percent.
The Cartel members are preparing to hold a meeting in May to discuss the extension of the OPEC deal for 2H2017.
Kuwaiti Oil Minister Issam Almarzooq said on Apr.19 that Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend its six-month agreement on output cuts beyond June, Bloomberg reported earlier.
According to an official document, prepared by Iran’s Oil Ministry and seen by Trend, Iran has increased gas output by 25,000 b/d from the oil layer of South Pars and 10,000 b/d from Azar field.
On the other hand, the country has nominal production capacity of 280,000 b/d of oil output from the first phases of newly developed five fields at the West Karoon Block. However, Iran used only a half of this volume in late 2016 due to uncompleted pipeline expansion project to link the Block to oil terminals.
Coming to 2017, Iran even decreased the output level from the Block to about 100,000 b/d because of the OPEC agreement.
Therefore, Iran has at least extra 180,000 b/d of output capacity and would have more due to development of all mentioned new fields in mid-2017.
However, the point is that 80 percent of the country’s active oil fields are in their second half life and would lose 300,000 b/d of their production gradually by early 2018, according CEO of National Iranian Oil Company Alir Kardor’s last week announcement.
Therefore, Iran can replace the idle capacity of these fields with oil fall amount gradually during 2017 and maintain the production level.
It would be in favor of Iran as well as all to keep oil price high during the current year.
Dalga Khatinoglu is the head of Trend Agency’s Iran news service, follow him on Twitter: @dalgakhatinoglu