New Report: Iran's Oil Production Will Reach Pre-Sanction Levels Next Year

The U.S. Energy Information Administration states that by the end of 2017, Iran's oil production will reach 3.7 million barrels per day, equivalent to the production levels Iran had in 2011 before international sanctions. In a report published on January 19, the agency noted that Iran's daily oil production is currently 2.8 million barrels and is expected to reach 3.3 million barrels by the end of this year. The report further indicates that depending on whether Iran can manage the natural decline in its aging fields over the next two years, avoid technical challenges, and develop new fields, the increase in production may differ by 250,000 barrels from the mentioned figures. According to the report, in addition to crude oil, Iran also produces up to 750,000 barrels of liquids and gas condensates daily. Iran and six world powers implemented the nuclear agreement on January 16, effectively lifting sanctions against Iran. Following the lifting of sanctions, and even before that, Iran announced it would rapidly increase its oil production by 500,000 barrels per day and would again increase production by the same amount in the second half of the year. Recently, the International Energy Agency also stated that Iran's crude oil production is likely to increase by up to 300,000 barrels in the next three months, but none of the existing reports have suggested a potential increase of one million barrels by the end of this year. The U.S. Energy Information Administration's report continues that most of the growth in Iran's oil production will come from aging fields that had to be closed due to sanctions, but some of the increase is expected to come from new fields. The report also mentions the cooperation of Chinese companies with Iran in the oil production sector during the sanctions, stating that these projects could add 100,000 to 200,000 barrels per day to the country's production by 2017. The U.S. Energy Information Administration estimates that the current volume of Iran's floating oil reserves is between 30 to 50 million barrels, which remained unsold during the sanctions, most of which is gas condensate. 80% of Iran's gas condensate is produced in South Pars. Gas condensate is a type of ultra-light crude oil produced from gas wells, and unlike oil fields, these wells cannot be shut down, as gas production would also cease. The report adds that the share of these floating reserves will likely play a significant role in the initial increase in Iran's oil exports.