Oil Official: According to the Leader's Policy, Oil Production Must Reach Six Million Barrels Per Day

The CEO of the National Iranian Oil Company defended the new model of oil contracts, stating that based on the "policies" of the Supreme Leader, Iran's oil production should reach five million and 700 thousand barrels per day, and the solution is to use this type of contract. According to Fars News Agency, Ali Kardar, the CEO of the oil company, said on Tuesday, October 12, that at the OPEC meeting in Algeria, an increase in Iran's oil production to four million barrels per day was approved, but on the condition that Iran stabilizes this production by the end of November, which is December 10 in the Iranian calendar. He emphasized that Saudi Arabia produces ten million and 500 thousand barrels per day, and Iran's "power" is determined by its production capacity. Mr. Kardar stated, "We are fighting to regain our market share," adding, "We negotiate for oil sales, and Saudi Arabia follows us and negotiates with the same parties, offering discounts." He further noted, "We did not expect Iraq to take our second position in OPEC, and we are now under severe pressure." The CEO of the National Oil Company also mentioned that Iran's oil fields are "mostly old and in the second half of their lifespan," and to produce more than four million barrels per day, new investments must be made in them. The official OPEC meeting is scheduled to take place on November 30 in Vienna. Reuters had previously reported, citing three sources in OPEC, that at the organization's meeting in Algeria in October, Iranian oil officials insisted on increasing the country's oil production to about four million and 200 thousand barrels per day. Meanwhile, Arab OPEC members want Iran to keep its production below four million barrels. Iran's oil production, which was over three million barrels per day before sanctions, dropped to one million barrels per day after Western sanctions. According to international organizations, Iran's average oil production in 2015 was about two million and 800 thousand barrels per day, and in 2016 it averaged about three million and 600 thousand barrels per day. In his remarks on Tuesday, the CEO of the National Oil Company also reported that the President of Iran informed the Supreme Leader in a letter that the 15 issues he had regarding the new model of oil contracts had been resolved. He added, "At the last moment, they went to the Supreme Leader to discuss whether he was satisfied with this issue or if there were still ambiguities to reflect back to us." The office of the Supreme Leader had raised 15 objections to the new model of oil contracts, which government officials and Ali Larijani, the Speaker of Parliament, announced had subsequently been resolved. However, some members of Parliament, including Hossein Ali Hajideligani, the representative of Shahin Shahr, have stated that in the latest government resolution, several of the Supreme Leader's objections to the contracts remain unresolved. The CEO of the National Oil Company also defended the new model of oil contracts, saying, "Look at how many concessions have been given in Iraq; we must engage with the world and technology. What have we been able to do in the South Pars oil layer over the past 11 years? Qatar is extracting 340 thousand barrels from this layer because it uses advanced technology." He added, "Engineers have attempted horizontal drilling three times and could not advance more than 700 meters, while on the other side, with foreign capabilities, they have conducted 12-kilometer horizontal drilling in our area." The Iranian Ministry of Oil held a "brainstorming session on the new model of Iranian oil contracts" in March 2014 with representatives of international companies, and subsequently unveiled a new model of oil contracts in December 2015, proposing the development of 49 oil and gas fields for foreign companies. Since then, some principlists and members of the ninth Parliament, including Ahmad Tavakoli, Alireza Zakani, Elias Naderan, Hossein Najabat, Ahmad Amirabadi, and Mohammad Dehghan, have strongly opposed this model of contracts. On Saturday, February 10, 2016, some Basij forces intended to gather in front of the Ministry of Oil in Tehran to protest these contracts, but the police prevented this gathering. Some officials from the Ministry of Oil and members of Parliament have stated that Iran incurs a monthly loss of eight to ten billion dollars due to delays in implementing oil contracts and lower extraction from shared fields with other countries. In this regard, Bijan Zangeneh, the Minister of Oil, stated on Friday, September 5, that Iran has lost about 240 billion dollars in the South Pars field alone over the past years due to delays in implementing these contracts. Mr. Zangeneh threatened that "if necessary," he would disclose the names of individuals who are "working to prevent investment in Iran." Previously, Eshaq Jahangiri, the First Vice President of Iran, had stated that some foreign countries with shared fields with Iran are "spending and incurring costs" within the country to "prevent" the implementation of Iran's new oil contracts. In this context, the government will present a "new amendment regarding oil contracts." Zangeneh threatened critics and opponents of the new oil contracts, stating that the oil budget is no longer sufficient to meet the needs of the provinces. The Iranian Ministry of Oil has signed "confidentiality agreements" with seven international oil companies. The resolution regarding the new model of oil contracts has been "communicated to the government."