Iran's Oil Output May Fall 25%; Exports May Cease, FACTS Says
By Dinakar Sethuraman:
Dec. 9 (Bloomberg) -- Iran, the second-largest crude producer in the Organization of Petroleum Exporting Countries, may reduce output by as much as 25 percent and cease exports because of ageing fields and a lack of foreign investment.
Crude oil production may fall to as much as 3 million barrels a day by 2015 from 4.02 million last year and the country may halt exports, pending the approval of refining projects, after shipping about 2.3 million this year overseas, Singapore-based Facts Global Energy said in a report today. Iran has plans to produce 4.5 million by 2010 and 5 million after 2015.
``Without a major change in policy and investment climate in Iran, crude oil production and exports are projected to decline drastically in the future,'' analyst Vijay Mukherji said in the report e-mailed today. ``The incremental supply that Iran is promising to the world will simply not be available.''
Iran faces the prospects of an 8 percent annual decline in production of as much as 700,000 barrels a day because of a lack of investment and old technology. Sanctions by western nations and a tight credit market because of the global financial crisis have crimped financing for Iranian projects while a 70 percent decline in crude oil prices since July cuts investments.
The Middle Eastern nation may partner companies including China Petrochemical Corp., also known as Sinopec Group, StatoilHydro ASA and Oil & Natural Gas Corp. to develop new projects in areas such as Anaran, Azadegan, Yadavaran, Jofeir and Farsi, the report said.
Sinopec Group: National Iranian Oil Co.'s contract with Sinopec Group for Yadavaran has a lower payback period and a higher return of 14.98 percent, a premium of as much as 3 percent compared with older contracts, reflecting Iran's push to secure foreign investment, the report said.
"We project that new field development projects will somewhat help in compensating the loss from natural declines in mature fields, but in our view, unless current political and financial impediments facing the oil industry are removed we do not envision production exceeding 4 million barrels a day,'' the report said.
Iran extracts as little as 20 percent of the oil from the ground because of lack of adequate projects to enhance oil recovery by injecting natural gas into the ground, the report said.
Iran may add more than 450,000 barrels a day of crude distillation capacity between 2008 and 2015 through expansions and upgrades at refineries in Bandar Abbas, Arak, Lavan, Tabriz, Isfahan, and Shiraz, the report said.
Crude oil exports may drop to about 1 million barrels a day by 2015, and if an additional 800,000 to 1 million barrels of refining expansions are approved, crude exports could :decline to almost nothing,'' the report said.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at email@example.com