Iran Faces Obstacles in Oil and Gas Ambitions

Rigzone

“Every year Iran announces big new discoveries, but at the end of the year the capacity is still the same: (at the most) four million barrels per day. We believe this is the realistic limit to Iran’s capacity under the present system,” Fesharaki said in his year-end report on Iran’s oil industry. Decline rates in Iran are said to be rising, with onshore declines up from seven to eight per cent a year and offshore rates at 13 per cent a year, the report said. “This means Iran is losing 350,000 barrels per day of capacity a year and there is a possibility of the decline rising to 500,000 barrels per day annually before the end of the year,” Fesharaki said in his report.
Iran Faces Obstacles in Oil and Gas Ambitions
Deutsche Presse-Agentur (dpa) Monday, April 04, 2005

Iran’s ambitious plans to raise production and exports of oil, gas and condensates through a mix of projects involving local and international companies, face major obstacles, the Middle East Economic Survey reported Monday.

The National Iranian Oil Company (NIOC) aims to raise production from as little as 2.4 million barrels per day to 5.4 million barrels per day by 2009, the report said.

The Cyprus-based weekly publication quoted industry analyst Fereidun Fesharaki as saying that “adding three million barrels per day is virtually impossible given the revised buyback system and the way the system is set up”.

“Every year Iran announces big new discoveries, but at the end of the year the capacity is still the same: (at the most) four million barrels per day. We believe this is the realistic limit to Iran’s capacity under the present system,” Fesharaki said in his year-end report on Iran’s oil industry.

Decline rates in Iran are said to be rising, with onshore declines up from seven to eight per cent a year and offshore rates at 13 per cent a year, the report said.

“This means Iran is losing 350,000 barrels per day of capacity a year and there is a possibility of the decline rising to 500,000 barrels per day annually before the end of the year,” Fesharaki said in his report.

As regards condensate production at the primary South Pars gasfield project, this is expected to reach 1,015,000 barrels per day by mid-2007, with output increments of 425,000 barrels per day by 2008 and up to 550,000 barrels per day by 2010.

Finally, Iran’s current gas production currently stands at 25 billion cubic feet daily, a figure far below its mounting domestic needs, with political wrangling to completely halt exports, as local gas demand by 2010 is expected to amount to 42 billion cubic feet daily.

“Iran will export gas, but in a much more limited manner than Qatar. We view Iran as exporting 15 to 20 million tonnes a year of liquefied natural gas (LNG) by the middle of the next decade, with an upper ceiling of 25 to 30 million tonnes a year as a lifetime maximum,” Fesharaki concluded.