Iran's Plan to Produce 4.7 Million Barrels of Oil Daily

Ali Kardar, the CEO of the National Iranian Oil Company, stated on Sunday, February 19, that Iran plans to drill 500 new oil wells as part of its sixth development plan, aiming to increase the country's crude oil production to 4.7 million barrels per day. The sixth development plan is set to be implemented starting next April. According to Shana news agency, affiliated with the Ministry of Oil, Kardar added that oil production in Iran is expected to reach 4 million barrels per day by the end of April next year. The latest monthly statistics from the Organization of the Petroleum Exporting Countries (OPEC) indicate that Iran reported a production figure of 3.9 million barrels per day for January, but OPEC's assessment suggests that Iran produced 125,000 barrels less than reported. The U.S. Energy Information Administration and the International Energy Agency's statistics align with OPEC's evaluation of Iran's oil production. Iran has proposed several types of contracts to foreign companies for the development of its oil fields, with the most significant being the buy-back contract, which was the dominant type of oil contract in Iran until the end of Mohammad Khatami's presidency. This type of contract remained on the agenda during Mahmoud Ahmadinejad's administration but failed to attract foreign companies. The CEO of the National Iranian Oil Company mentioned that after all buy-back contracts ended, Iran's oil production briefly reached 4.2 million barrels, a record at the time. Statistics from the Iranian Energy Information Administration show that the highest oil production in Iran after the 1979 revolution occurred about 12 years ago when production reached 4.135 million barrels, although this figure included gas condensates, which were produced in much smaller quantities at that time. Currently, Iran produces about 560,000 barrels of gas condensates daily, which is typically not counted as oil in international statistics. In this context, Reuters reported on Sunday that Iran had previously announced it would achieve a production level of 4 million barrels by the end of the current solar year, but this plan has been postponed by a month to the end of April. It remains unclear how Iran can increase its production to 4 million barrels, given that under the OPEC agreement from late November last year, 11 OPEC members committed to reducing production by 1.2 million barrels per day in the first half of 2017, while Iran is only allowed to increase its production by 90,000 barrels to reach 3.797 million barrels. Two other members, Libya and Nigeria, are completely exempt from this agreement. Recently, Bijan Namdar Zanganeh, the Minister of Oil, stated that maintaining Iran's share in global oil markets is more important than the price of oil. He added that those who disrupted market balance by increasing their production in recent years and caused oil prices to drop should take responsibility for restoring it, referring to Saudi Arabia. According to the report, Iran introduced a new type of oil contract known as IPC to foreign companies in November 2015, which faced protests within Iran, particularly from conservatives, leading to several amendments to the contract terms. Iran has yet to hold its first oil tender to sign contracts with foreign companies. Iran plans to auction the development of 49 oil and gas fields based on these contracts and expects to attract $100 billion in investment for these fields, with 80% coming from foreign companies. The CEO of the National Iranian Oil Company stated that the sixth development plan aims for gas production to reach 1.411 billion cubic meters per day. Iran's current raw gas production capacity exceeds 820 million cubic meters per day, with 700 million cubic meters converted into sweet gas for domestic and industrial use.