Iran’s Rouhani Government is promising an expansion in oil production, despite an OPEC cap and uncertainties over the Islamic Republic’s oil and gas fields.
Oil Minister Bijan Zangeneh (pictured) said in an interview with a London-based newspaper that Iran is planning to increase the capacity for oil production to 4.7 million barrels per day, from its current level of 3.8 million.
However, in a possible nod to ongoing challenges, Zanganeh added that this would be in the long-term.
Since the implementation in January 2016 of its nuclear deal with the 5+1 Powers, Iran has recovered much of its production and exports to reach the levels of 2012, when the US and Europe imposed sweeping sanctions that cut exports of about 2.5 million bpd by up to 70%. The recovery was responsible for most of the 7% growth that the Iranian economy recorded in 2016.
OPEC exempted Iran from a production freeze imposed in November 2016, adopted to try and check low global prices; however, it placed the 3.8 million bpd cap on Tehran.
Zanganeh said Iran will continue to observe the limit, extended in May for another nine months.
The National Iranian Oil Company had declared that production would increase to 4.1 million bpd by March 2018. Iran is currently exporting about 2.1 to 2.2 million bpd per day.
Iran also faces the challenge of how it will ensure the technology and investment to maintain production. Trying to obtain the necessary foreign input, the Rouhani Government has put forth an Iran Petroleum Contract in which overseas companies can share equity with Iranian partners; however, this has been held up for months over negotiation of the terms and internal opposition, notably from some MPs. The Revolutionary Guards are also wary, as they have substantial economic interests — including engineering and logistical contracts — in the fields.
Zanganeh did not refer to the issues around the IPC. Instead, he maintained that, despite the Trump Administration in the US, “I am receiving only positive things [from foreign companies]. I have not received any negative signal in recent times.”