Iran Oil & Gas Report Q4 2013
Published by Business Monitor International
on Oct 4, 2013
, 112 pages
PDF - Download Now with 3 Quarterly Updates format - Download Now
Further sanctions and continued cutbacks by key Iranian customers reinforce the negative outlook for Iran's oil sector. With limited prospects for a positive resolution of sanctions in the near term, we highlight both the short- and possible long-term downside risks confronting the Iranian oil sector as international isolation continues. Indeed, gas export schemes and refinery expansion projects will make little progress as international oil company partners heed the investment embargo. Meanwhile, Iran is claiming a succession of major oil and gas discoveries that, if proven, demonstrate considerable upside potential to its existing resource base. In a bid to secure much-needed investment, Iran is offering improved terms to contracts long seen as uncompetitive by operators, but few national oil companies are likely to bite in view of sanctions and a backlash from the US/UN.
We highlight the following trends and developments in Iran's oil and gas sector:
- The country's oil reserves have increased in the past two years. In 2012, Iran's oil reserves were estimated by the EIA at 151bn barrels (bbl), a 1.8% increase from the 2011 figure of 137bn bbl. This figure is slightly below than that provided by OPEC, which estimated Iranian oil reserves at 154bn bbl for 2012. At the time of writing, Iran's oil reserves are estimated by the EIA at 155bn bbl.
- Iranian oil production and exports has fallen substantially since 2011 on the back of ever-tightening sanctions against the current Iranian government. We estimate that production in 2012 has fallen by around 17% from 2011 levels. In July 2013, the International Energy Agency (IEA) reported that Iran's July crude oil production was estimated at 2,65mn barrels per day (b/d), down 50,000b/d from June levels.
- According to the country's oil minister Rostam Qasemi, Iran's crude exports have declined by 20% amid international sanctions between 2011 and 2012. However, we estimate that a more likely number is a decline of just under 30%, from 2.5mn b/d in 2011 to 1.8mn b/d in 2012. We expect a further decline of 14% in 2013. We forecast that total oil production in 2013 will be approximately 3.25mn b/d, representing a 7% decrease from 2012 production levels. At present, we are assuming an increase in output beginning in 2014, with the change of administration in the country having the potential to modify the sanctions landscape. We forecast that production will rise to 3.9mn b/d by 2017, and reach 4.3mn b/d in 2022.
- Over the near term, we see Iranian gas production rising at an average rate of 3-4% per annum, to reach 185bn cubic metres (bcm) by 2017, with demand rising to 180bcm. Our production forecast falls short of earlier Iranian government predictions that production would reach 200bcm per annum within the next few years.
- According to Iranian Oil Minister Rostam Qasemi, Phases 12, 15 and 16 of the giant South Pars gas field are scheduled to start production in the current Iranian calendar year (started on March 21 2013). The three phases will significantly increase the country's gas production. However, according to a recent interview of Gholam-Hossein Khaje-Ali, the former managing director of South Pars gas field's main contractor Sepanir Oil&Gas Energy Company, the field's development projects are facing severe financial problems. While Phases 15 and 16 are 94% complete, there is a lack of proper equipment to successfully complete the projects.
- Iran is reportedly eyeing its first gasoline export hub in the southern Iranian city of Bandar Abbas, near the Persian Gulf, amid Western sanctions against the country. The Bandar Abbas and Persian Gulf Star refineries are expected to have a total production capacity of 50mn litres of gasoline per day. Gasoline produced at the two refineries will meet Euro-4 and Euro-5 requirements. Four oil refining projects are underway in Iran, which are expected to boost the country's gasoline production capacity to 144mn litres, according to Farhad Ahmadi, the managing director of National Iranian Oil Engineering and Construction Company.
- On May 10 2012, Iran's state news agency announced the discovery of 8-10bn barrels (bbl) of oil in an unnamed oilfield located within the Iranian sector of the Caspian Sea. After the 'huge light crude oil' discovery reported by the Mehr news agency in April, this was the second reportedly substantial find to have been made in 2012. The Caspian oil discovery suggests that the total volume of resources found since 2009 - according to Iranian news sources - could easily exceed 53.06bn bbl of liquids and 3,500bn cubic metres (bcm) of gas.
- A consortium has been formed to develop Iran's oil and gas fields in the Caspian Sea, reports Mehr News Agency, citing Mohammad Sahid Seigi, the head of the maritime studies centre at the Sharif University of Technology. The consortium was created by the country's oil ministry, several Iranian universities and Khazar Oil Company. Close to 2,500 oil and gas wells are likely to be drilled and commissioned during the country's fifth five-year economic development plan (2010-2015).
Click here to open the POPUP
You've added the following report to your cart: