Iran's 'Difficult' Return to the Oil Market After Sanctions Lifted

Two international energy consulting firms have reported on the challenging conditions facing Iran as it attempts to return to oil markets. Wood Mackenzie and Verisk Maplecroft, two reputable international firms that provide analyses in the energy sector and global economic risks, stated in a joint report that the likelihood of Iran and six world powers reaching a comprehensive nuclear agreement is high, but the process of lifting economic sanctions may take up to a year, and Iran's oil production and exports will gradually increase in a limited manner. The report, a copy of which was sent to Radio Farda by Wood Mackenzie on Thursday, July 4, indicates that if a nuclear agreement is reached by July 10, Iran will only be able to increase its oil production by 120,000 barrels per day this year. According to the forecasts of these companies, Iran's daily oil production will increase by 260,000 and 220,000 barrels respectively in 2016 and 2017. Overall, based on this report's assessment, Iran will be able to add a total of 600,000 barrels to its daily production over the next three years. After the imposition of Western sanctions in mid-2012, Iran faced a sharp decline in oil exports and reduced its production. Iran's oil exports, which were 2.5 million barrels per day, fell to 1.1 million barrels last year. Bijan Namdar Zangeneh, Iran's Minister of Oil, recently announced that after the lifting of sanctions, Iran would add 500,000 barrels to its exports within a month, and this figure would reach one million barrels per day within six months. The report states that if economic sanctions against Iran are lifted in the middle of this year, the process of dismantling them will likely take until the middle of next year. The report predicts that, given the gradual increase in Iran's oil exports and production over the next three years, the lifting of sanctions against Iran is not expected to have a significant impact on global oil prices. The two mentioned international companies have assessed that Iran's crude oil production will rise from 2.7 million barrels this year to 3.4 million barrels in 2020 and 4.4 million barrels in 2025, which requires attracting foreign direct investment. Regarding Iran's oil production and exports, the U.S. Energy Information Administration reported on Wednesday, July 3, that OPEC member countries have easily filled the gap left by Iran's oil in international markets since the imposition of sanctions. According to this report, published on the official website of the U.S. Energy Information Administration, a subsidiary of the U.S. Department of Energy, Iran's oil and gas condensate exports were about 2.6 million barrels per day in 2011, but fell to below 1.3 million barrels last year: 'This reduction has been easily filled by countries such as Iraq, Saudi Arabia, Kuwait, Angola, and Nigeria, as the type of oil produced in their fields can replace Iran's heavy and light oil.' Zangeneh last month urged OPEC members to make room for an increase in Iran's oil exports. Based on the reports from Wood Mackenzie and Verisk Maplecroft, Iran has been able to significantly and suddenly increase its gas production over the past year. The report states that Iran's daily gas production, along with gas injected into oil fields, is about 546 million and 515 thousand cubic meters, but by 2017 it could reach 680 million cubic meters. Iranian officials say that Iran's daily gas production will reach 1,100 to 1,200 million cubic meters within three years. Iran claims that all phases of South Pars will be inaugurated by 2018. The report states that over the past year and this year, a total of five phases of South Pars have been inaugurated early, and if completed, the total gas production from these five phases will reach 160 million cubic meters per day.