No leeway in Iran oil exports using inflated data, says US

A general view of the phase 15-16 of the South Pars gas field in the southern Iranian port of Assaluyeh, some 1,000km south of Tehran. Iran may be inflating its data to try to set a higher baseline for subsequent negotiations and hoping its elevated numbers will help attract overseas investors, say US government officials.

Bloomberg/Washington

Iran says it shipped 1.51mn barrels a day in November, according to figures the nation submitted to the Riyadh-based Joint Organisations Data Initiative. The data, along with historical export figures, were published January 20, the same day the US and its allies temporarily eased some of the sanctions against the country as part of a deal to curb its nuclear programme.

The Obama administration said after the November 24 accord was struck that Iran’s exports have been forced down to 1mn bpd, a reduction of more than half from 2.5mn a day before US and European Union sanctions were imposed, and won’t be allowed to increase before a final nuclear deal is reached and all sanctions are lifted.

Iran may be inflating its data to try to set a higher baseline for subsequent negotiations and hoping its elevated numbers will help attract overseas investors, said the US government officials, who spoke on condition of anonymity because they weren’t authorised comment publicly. So far, Iran hasn’t challenged the 1mn bpd figure in meetings with US negotiators, one of the US officials said on Wednesday.

The Paris-based International Energy Agency, an adviser to 28 nations, estimated on Tuesday that buyers imported about 1.07mn bpd from Iran in 2013. In contrast, Iran’s own data show shipments fell below 1.5mn bpd only once in the past 17 months.

“It creates some confusion to legitimise leakage to that level,” Olivier Jakob, managing director at Petromatrix GmbH, a consultant in Zug, Switzerland, said by e-mail on Monday. Still, “with the financial sanctions and the required waivers, it is not really Iran that decides how much it can export.”

Oil prices fell in late November following the accord to constrain Iran’s nuclear programme in return for an easing of certain sanctions. Under the accord, Iran’s six remaining crude buyers - China, India, Japan, South Korea, Turkey and Taiwan - will be allowed to continue buying at “current levels,” instead of being forced to make further “significant reductions” in volume, as US sanctions law requires.

Energy analysts forecast Brent crude will fall 5% to an average $103 a barrel in 2014, partly on bets that exports from Opec members Iran and Libya will eventually climb, according the median of 34 estimates compiled by Bloomberg.

Iranian President Hassan Rouhani, speaking at the World Economic Forum in Davos, Switzerland, on Thursday, said his country has a “strong” will to reach a comprehensive nuclear accord. Rouhani told a meeting of about 30 executives in Davos, mostly from the oil industry, that Iran is a good place to invest.

Some members of the Organisation of Petroleum Exporting Countries, notably Iran and Venezuela, regularly report output numbers that exceed consensus estimates, according to the organisation’s monthly reports. Export data submitted to JODI fall into the same category, according to analysts at BNP Paribas SA in London and IHS-PFC Energy in Washington.

Opec’s monthly report on January 16 said the nation’s December crude production was 2.73mn bpd when calculated using secondary sources that include analysts and news agencies. That compares with 3.22mn reported directly by Iran to Opec, the same report showed.

“Essentially, these are not numbers to believe whatsoever,” Jamie Webster, an analyst at IHS-PFC Energy, said of Iran’s submissions, adding that the country may be signalling to other Opec members they should make way for its eventual return. “I suspect they don’t want to admit just how impacted they have been” by sanctions.

US officials interviewed said their own estimates are based on customs data from importing nations, ship tracking, intelligence reports and sources they won’t disclose.

Officials at Iran’s oil ministry in Tehran declined to comment and said questions should be referred to the country’s oil minister, Bijan Zanganeh.

Iran had not submitted any data to JODI after oil sanctions took effect in July 2012, before resuming this month and supplying numbers dating back to May 2012.

“The JODI figure has to be taken with a healthy pinch of salt,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas. “Given the source of the data, most analysts will discard the figures off the bat.”

Trevor Houser, an energy analyst and partner at Rhodium Group, a New York-based economic research firm, also said JODI’s database of national statistics on production, exports and imports, aren’t reliable.