Abu Dhabi: Iran would probably be capable of adding up to 800,000 barrels of oil per day and liquids to its production in the next six to 12 months if the Islamic republic reaches a nuclear deal with six major world powers this week, according to a global energy consulting firm.
Iran is holding negotiations with P5+1 group of countries including United Kingdom, the United States, China, France, Russia, and Germany to end decades long blockade on its trade that has impacted its oil production.
The country holds the world’s fourth-largest proved crude oil reserves and the world’s second-largest natural gas reserves. Its current oil production is estimated to be about 2.9 million barrels of oil per day.
A report released by Washington DC-based SVB Energy states that Iran would probably be capable of adding up to 800,000 barrels of oil per day to its production in the next six to twelve months if oil export related sanctions are removed.
“There is no doubt that any positive outcome of the deal will have an immediate downward effect on the prices even before any actual Iranian production rises,” the report said. “This is not only because of the psychological impact on the market due to an anticipated production boost but also because of Iran’s 36 to 37 millions barrels of stored liquids in Iranian floating storages that could be released immediately.”
The energy consultancy firm expects that by 2020 and upon completion of development projects in the West Kurian oilfields, an additional 650,000 to 700,000 barrels of oil per day will be added to Iran’s crude oil production volume.
Iran’s total condensate production capacity from South Pars could rise to about 700,000 to 800,000 barrels by 2018 and to a million barrels by 2020, the report pointed out.
According to it, Iran would need at least $70 billion of investment to reach its midterm production capacity goal by 2020.
Iranian Oil Minister, Bijan Zangeneh, recently announced an urgent demand for approximately $40 billion for South Pars development plans and at least $20 billion to increase its production capacity to develop West Karen. Iran’s National Development Fund approved allocation of $20 billion for investment in West Karun.
Oil prices have been falling due to weak demand and record oil production coming from the US shale sector. Oil prices plunged by more than 50 per cent in the last few months. Brent, the international benchmark for crude oil, was trading at less than $60 this week.
Another analyst, from Singapore-based Phillip Futures Limited, said that oil price will continue to display its lack of bullishness with the uncertainty coming from Iran talks.
“As long as they come to an agreement and the crude sanctions lifted, I would think that oil prices will drop on the immediate term,” he said in an emailed statement to Gulf News. “Recovery of prices should be seen depending on the timing of the release of Iranian crude. Provided it would be delayed and a long process, prices should return back to higher levels.”
The Iranian talks are expected to be completed by Friday, July 10. The negotiating countries reached a preliminary deal in April.