Zanganeh: Iran oil output currently at 3.82 mm bpd

Jun 07, 2016 12:00 AM

Iranian oil minister Bijan Zanganeh accused its regional neighbors of trying to take away its customers by offering cheaper oil, but said despite not offering much of a price discount itself, Iran had managed to retake 1 million b/d.

Zanganeh's remarks come in an interview with S&P Global Platts in Vienna Friday, the day after OPEC's meeting in the Austrian capital.

Iran has looked to reclaim market share since nuclear sanctions were lifted in mid-January, with Zanganeh stating that output is currently 3.82 million b/d. He predicts Iran will have around 5-6% spare production capacity after reaching 4 million b/d by the end of the year.

Zanganeh said India, China, South Korea, Europe (including Turkey) and South Africa were primary markets but that Iran "should look more in Europe and Africa."

This is especially the case for plans to invest in refineries in other countries, with 1.3-1.4 million b/d to be exported as feedstock to overseas refineries, but cautioned that finance could be an issue.

"We have this proposal but the National Iranian Oil Company doesn't have the money to do it. So we proposed that the National Development Fund comes and does the investment, either directly itself or giving loans to non-state sectors and buys [shares] in those refineries in the chosen destinations, under the condition that they take all their feedstock from Iran, or a main part of the feedstock," Zanganeh said.

Zanganeh stressed it was very lucrative for international energy companies such as Total, Lukoil and Eni to invest in Iran. "Oil [production] in our region is very low. In Iran, it costs a maximum of $10/b."

He said that there are contractual risks, but that was unlikely to act as a deterrent, without elaborating.

He did think that US companies were afraid but hoped that this will change. "The way is open for them on our side."

Zanganeh said the whole investment plan will require a total of $70 billion in the coming years and that Iran's Petroleum Contract will be part of that.

Iran plans fewer than 20 projects as part of the first tenders for the IPC. It has said that it will have its IPC ready and approved in June to soon put out the tenders.

"First we announce the fields and ask companies to come forward and [declare] their interests in any of those fields. We evaluate the companies regarding their technological and financial capabilities and then we put the tender documents at their disposal," he added.

 

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