Iran’s Crude Output to Fall 25%; Will Cease Exports
Iran, the second largest producer among members of the Organization of Petroleum Exporting Countries (OPEC), may be forced to reduce output by 25 percent and ease exports due to ageing oil fields and a lack of foreign investment.
An article in the Gulf Times cited a report by Singapore-based Facts Global Energy which projected that Iran’s crude oil production may fall by more than a million barrels per day by 2015.
“Without a major change in policy and investment climate in Iran, crude oil production and exports are projected to decline drastically in the future,” analyst Vijay Mukherji said in the report e-mailed yesterday. “The incremental supply that Iran is promising to the world will simply not be available.”
Iran, which produced an average 4.02 million barrels per day last year, may drop to as low as 3 million barrels per day in the coming years, the report continued.
Sanctions by western nations due to the country’s secret nuclear work and a tight credit market because of the global economic crisis have crimped financing for Iranian projects while a 70% decline in crude oil prices since July has severely cut investments.
“We project that new field development projects will somewhat help in compensating the loss from natural declines in mature fields, but in our view, unless current political and financial impediments facing the oil industry are removed we do not envision production exceeding 4 million barrels per day,” the report said.
Iran extracts as little as 20% of the oil from their wells due to a lack of adequate technology to enhance oil recovery by injecting natural gas into the ground.
If their production were to decline by as much as the report predicts, their exports would in turn “decline to almost nothing,” the report said.
Iran came under fire from OPEC members when they were alleged to admit that they were ignoring the recent OPEC production cuts. The head of the National Iranian Oil Company, Seifollah Jashnsaz, was quoted on Saturday as saying that Iran was producing around 4.05-4.08 million barrels per day, which would be more than allowed under the latest OPEC agreement.
But the government’s OPEC representative said that those claims were taken out of context.
“Iran is fully adhering to its OPEC commitment to reduce output,” Mohammad Ali Khatibi, Iran’s representative to OPEC told Reuters. “He didn’t mean we are producing this amount now …We fully adhere (to) our commitment,” Khatibi said, adding that Iran’s out put stood at 3.8 million bpd.