Iran Announces London Oil Conference in February

Iran announced today that it will hold an oil and gas conference on 22-24 February in London to attract major international oil companies to invest in Iranian oil and gas projects post sanctions. Iran also said it will publish the terms of post-sanctions oil contracts at a conference in Tehran on 21-22 November. The new terms are said to remove obstacles for oil majors to invest in Iran.

State of Iran’s Oil Industry ‘Catastrophic’ – Oil Minister

Iranian Oil Minister Bijan Zanganeh told Majlis, the Iranian parliament, that the current status of Iran’s oil industry is “catastrophic,” with no money for key oil projects.

Zanghaneh said the falling oil prices have drained his ministry’s revenues to an extent that “no cash is currently available for the oil industry’s crucial investments.”

“The Oil Ministry has come across problems in paying the salaries of its own staff, let alone making (crucial) investments in shared fields,” Zanghaneh added. (Press TV, 16 February)

“The current situation of the oil industry is catastrophic,” Zanghaneh said. “If the clause (allocation of $4.8 billion from national sovereign fund to oil ministry) is not approved, we will fall into a real crisis.”

The proposal for allocating $4.8 billion from National Development Fund to Oil Ministry, however, failed to get enough votes in the Majlis and did not pass. It was forwarded to a Majlis committee for further discussions, Press TV reported.

File photo: Iranian Oil Minister Bijan Zanganeh (Press TV)

South Pars Phase 16 Comes On Stream

Iran announced that the Phase 16 of the country’s giant South Pars gas field has become operational, supplying its first delivery of 7.5 million cubic meters (mcm) of sweet gas on Friday.

Phase 16 and the related Phase 15 are projected to eventually yield 57 mcm (2 billion cubic feet) of natural gas and 75,000 barrels of gas condensate per day. A number of gas desalting installations still need to be operational.

The South Pars/North Dome Field is the world’s largest gas field, shared between Qatar and Iran.

File photo: Horizon of Persian Gulf in South Pars (Wikipedia)

Iran to Draw on Sovereign Wealth Fund to Cope with Plunging Oil Prices

Iranian Oil Minister Bijan Zanganeh told oil ministry’s news site SHANA that Iran will draw on its National Development Fund, its sovereign wealth fund, to cope with damage to its oil industry from plunging global oil prices.

“By drawing upon its National Development Fund to reimburse contractors active in upstream projects, Iran will make up for the impact of the oil revenue decline on these projects,” Zanganeh said. (SHANA, 14 November/Reuters, 15 November)

Iran needs to invest heavily in its aging oil production facilities and infrastructure, and the oil price plunge has slashed the funds it has available to do that.

Sovereign Wealth Fund Institute, which tracks such funds worldwide, estimates that Iran’s Fund is worth about $62 billion, but some of its assets are frozen by the sanctions imposed over the country’s nuclear program. By contrast, Saudi Arabia’s sovereign wealth fund exceeds $700 billion.

The International Monetary Fund estimates that with oil prices at $80 a barrel, Iran will run a budget deficit of $8.6 billion this year at the official exchange rate. (Reuters, 15 November)

Iran will adopt “contradictory” monetary policy for the next year, Zanganeh said. He pointed out that the government will raise tax revenues due to plunging oil prices, but such move would slow down an economy that is recovering only slowly from a deep recession triggered by the sanctions. (SHANA, 15 November)

File photo: Iran's oil export terminal at Kharq island (Getty Images)

Iran-Pakistan Gas Pipeline Shelved

The $1.3 billion Iran-Pakistan gas pipeline has been shelved by Pakistan, dealing a blow to Islamabad's efforts to access cheap energy sources to overcome a crippling power crisis.

“In the absence of international sanctions the project can be completed within three years, but the government cannot take it any further at the moment because international sanctions against Iran are a serious issue,” Pakistani Petroleum Minister Shahid Khaqan Abbasi said today. (NDTV, 25 February)

The agreement for the pipeline was signed in 2009. Former Pakistani president Asif Ali Zardari and his then Iranian counterpart Mahmoud Ahmadinejad had announced the start of the project in February last year. Officials had said at the time it would be completed in 15 months.

File photo: Iran-Pakistan (IP) gas pipeline under construction. (IRNA/NDTV)

Iran Names 7 Western Oil Companies It Wants to Return

Iran has named seven Western oil companies it wants back in its vast oil and gas fields once international sanctions are lifted.

Iranian Oil Minister Bijan Zanganeh named the seven: Total of France, Royal Dutch Shell, Italy's ENI, Norway's Statoil, Britain's BP, and Exxon Mobil and ConocoPhillips of the United States, Reuters reported on Thursday.

The sanctions instituted in 2012 have choked out foreign investment in Iran’s oil industry and pushed production down to 2.65 million barrels a day in November. In 2011, Iran’s production averaged 4.3 million bpd.

Zanganeh met senior executives from Eni and Shell on Thursday, an Iranian oil official said.

Notably, Zanganeh made no mention of Russian, Chinese or Japanese companies or those of other nationalities. Asked whether he would like to see Asian, Indian, Chinese companies coming to Iran as well, he said: “Yes, but now we are discussing with Western (firms).” (Reuters, 5 December)

Iran Oil & Gas Outlook: 4Q2013

In its latest report on Iran’s oil and gas outlook, Business Monitor International said in its October edition of Fast Market Research that sanctions and continued cutbacks by key Iranian customers reinforce the negative outlook for Iran's oil sector. 

The report said the current government scheme in offering improved terms to oil contracts long seen as uncompetitive by operators would not result in any significant new agreements as few national oil companies are likely to bite in view of US/EU/UN sanctions and fears of backlash.

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 the long run. 

The report highlights the following trends and developments in the country’s oil and gas sector:

“Iran’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."

 Source: Fast Market Research/ Business Monitor International/ USPRwire (October 2013)

Iran's added crude oil tankers from Chinese shipyards

File photo, recent NITC addition: Sunrise (formerly Chun He 120) - IMO 9615092  [shipspotting.com] 

According to the World Tribune (8/9/13):

Iran has taken delivery of new oil supertankers. The National Iranian Tanker Co. has acquired four new supertankers in mid-2013 as part of efforts to maintain the nation’s crude oil export industry.

The supertankers were said to have a capacity of two million barrels each. Iran’s state-owned Press TV said China plans to complete the delivery of the vessels by 2014.

Previously, according to Reuters (2/5/13):

Iran has taken delivery of several new tankers from Chinese shipyards, giving it greater flexibility in maintaining oil exports in the face of Western sanctions.

Since the start of 2013, two supertankers have joined Iran’s trading fleet, with another three new vessels having arrived in recent months, according to industry sources and shipping data. Each vessel has a maximum capacity of 2 million barrels of oil.

With the latest acquisitions, NITC’s supertanker fleet has been boosted to 30 vessels with a maximum carrying capacity of 60 million barrels. It has an additional 14 small crude oil tankers.

The Atlantis and Infinity, the two vessels that joined NITC’s fleet in recent weeks, are part of a $1.2 billion contract with two Chinese shipyards that was ordered in 2009 for 12 new supertankers. The Carnation, Rainbow and Skyline reached NITC last year.

Below is a partial rundown on Iran's recent tanker additions [source: Martime-Connector.com]: 

IMO 9569205 - Carnation - Flag Tanzania (8/2: Persian Gulf 26.96538 / 56.419418, 0.4 kn / 311°)

IMO 9569619 - Rainbow - Flag Tanzania (8/6: Malacca Strait 3.72438 / 99.984009, 14.6 kn / 311°)

IMO 9569669 - Skyline - Flag Tanzania ( NA )

IMO 9569695 - Dew Drop - Flag Tanzania (8/13: N. China coast 38.874668 / 122.0592, 0.2 kn / 319°)

IMO 9569700 - Deniz - Flag Tanzania (8/12: Persian Gulf 26.78751 / 52.76046, 12.5 kn / 300°)

IMO 9569712 - Dusk - Flag Tanzania (7/24: near Singapore 1.230638 / 103.461, 12 kn / 268°)

IMO 9569621 - Atlantis - Flag Tanzania (7/27: near S. India coast 10.23946 / 75.302139, 13.7 kn / 354°)

IMO 9569671 - Infinity - Flag Tanzania (8/13: C. China coast 29.955669 / 121.8143, 0 kn / 17°)

IMO 9569683 - Demos - Flag Tanzania (8/12: Persian Gulf 26.193119 / 54.494492, 13.6 kn / 102°)

IMO 9615092 - Sunrise - Flag Tanzania (7/15: Persian Gulf 26.17207 / 55.367729, 15.1 kn / 58°)