SINGAPORE: Iran, the second-largest crude producer in the Organisation of Petroleum Exporting Countries, may reduce output by as much as 25% and cease exports because of ageing fields and a lack of foreign investment.
Crude oil production may fall to as much as 3mn bpd by 2015 from 4.02mn last year and the country may halt exports, pending the approval of refining projects, after shipping about 2.3mn this year overseas, Singapore-based Facts Global Energy said in a report yesterday. Iran has plans to produce 4.5mn by 2010 and 5mn 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 yesterday. “The incremental supply that Iran is promising to the world will simply not be available.”
Iran faces the prospects of an 8% annual decline in production of as much as 700,000 bpd 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% 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 and Oil & Natural Gas Corp to develop new projects in areas such as Anaran, Azadegan, Yadavaran, Jofeir and Farsi, the report said.
National Iranian Oil Co’s contract with Sinopec Group for Yadavaran has a lower payback period and a higher return of 14.98%, a premium of as much as 3% 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 4mn bpd,” the report said.
Iran extracts as little as 20% 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 bpd 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 1mn bpd by 2015, and if an additional 800,000 to 1mn barrels of refining expansions are approved, crude exports could “decline to almost nothing,” the report said.
The weak economy and lower petroleum demand has already caused US crude oil prices to sink from a record $147 a barrel in July to near $40. – Bloomberg |
