The first major Western energy investment since sanctions against Tehran were lifted will cost up to $5 billion, with production expected to start within 40 months, an Oil Ministry source said, Reuters reported.

The US and other world powers lifted sanctions after the country pledged to roll back its nuclear program.

With the 20-year deal, Total is now returning to Iran, where it first began operating in the 1990s. Total CEO Patrick Pouyanné said in a statement on Monday that the investment would be “in strict compliance with applicable national and international laws”.

The US still has restrictions in place that block most American companies from investing in Iran. And some Western companies have been reluctant to jump in since Iran still faces sanctions that prevent firms from transacting with Iran in US dollars.

Total estimates the first phase of the project will cost around $2 billion. It is taking a 50.1 percent stake in the South Pars project. CNPC will own 30 percent while the other 19.9 percent will go to Petropars.

The project will have a production capacity of two billion cubic feet per day, or 400,000 barrels of oil equivalent per day including condensate, according to Total.

Iran’s Oil Ministry predicts the project will eventually produce gas products worth $54 billion based on current prices. The gas will start flowing into the Iranian market in 2021.

Iran has significantly ramped up its energy production since the sanctions were relaxed.

Figures from OPEC show Iran has boosted its daily crude oil production by more than 33 percent since 2015.

Iran sits on nine percent of the world’s proven oil reserves and 18 percent of the planet’s natural gas, according to data from BP’s Statistical Review of World Energy.

Iran and Qatar share the South Pars field.

Iran has signed a flurry of deals with Western companies over the past year since the easing of international sanctions on Tehran after an accord was reached over its nuclear program.

Iran needs foreign investment to repair and upgrade its oil and gas fields. It also seeks the transfer of technology to its oil industry after a decade of sanctions.

Iran has named 34 companies from over a dozen countries as being eligible to bid for oil and gas projects using the new, less restrictive contract model.

The firms include Shell, France’s Total, Italy’s Eni, Malaysia’s Petronas and Russia’s Gazprom and Lukoil, as well as companies from China, Austria, Japan and other countries.

Russia’s Zarubezhneft signed an MoU to conduct feasibility studies on two joint fields in the west of the country.

Norway‘s International Aker Solutions Company signed an MoU to modernize Iran’s oil industry.

In May 2016, Austria’s OMV signed an MoU for projects in the Zagros area in western Iran and the Fars field in the south.

South Korean Daewoo Engineering and Construction (Daewoo E&C) signed an MoU to construct an oil refinery in Bandar Jask, on the southern coast of Iran.

Italy’s Saipem signed MoUs to cooperate on pipeline projects, upgrading of refineries and development of Tous gas field in the northeastern province of Khorasan Razavi.

Norwegian oil and gas company DNO said it was the second Western energy company after Total to sign a deal with Iran under which it agreed to study the development of the Changuleh oilfield in western Iran.

Lukoil, Russia’s second biggest oil producer, hopes to reach a decision on developing two new oilfields in Iran.

Germany’s Siemens AG signed an MoU in May to overhaul equipment and facilities at Iran’s oil operations and refineries.

BASF’s Wintershall oil and gas exploration subsidiary signed an MoU with the National Iranian Oil Company in April 2016.

President Rouhani:
Developing South Pars Phase 11 not only an economic contract, but also a scientific, technological, management cooperation

President Rouhani met with the Chairman and CEO of France’s Total company and described South Pars region as an important centre for developing international cooperation with Iran in the field of energy-technology.

In the meeting that was held on Monday in Tehran, Dr Rouhani told Total’s Patrick Pouyanné: “Due to the good potentials and hard-working young men in Iran, the contract of developing Phase 11 of South Pars is not only an economic one, but also a scientific, technological and management cooperation”.

Total CEO: We seek a long-term cooperation with Iran

“The Islamic Republic of Iran and France have always had good relations and cooperation with each other,” he continued saying.

Referring to France’s position in economy and energy technology, he added: “The signing and execution of this contract will be a significant step in development of economic and technological cooperation between the two countries”.

Stating that the 11th administration has attempted to finalise the Joint Comprehensive Plan of Action (JCPOA) to clear the path for economic cooperation between major companies and Iran, the President said: “Fortunately, this political will from the Iranian side and among P5+1 countries paved the way for this agreements with Total”.

President also referred to his Europe and France visit after the signing of JCPOA, adding: “In Paris, there was a good political will among the authorities of both countries to develop cooperation and important agreements were signed between the two countries to deepen ties and cooperation”.

“It is our policy to cooperate with major companies such as Total,” said Dr Rouhani, adding: “Currently, projects in gas and oil worth roughly $200bn are ready to be invested on and major foreign companies can cooperate in these projects”.

“We must work hard to achieve peace and stability in the region serving economic progress and development of the region, because scientific and developmental cooperation can help us combat ignorance and poverty as the bedrocks of terrorism expansion,” he continued.

The President also expressed hope that with the new agreements and cooperation in the field of gas, oil and petrochemicals, Iran and France take considerable steps in developing ties.

During the meeting, the Chairman and CEO of France’s Total company Patrick Pouyanné also expressed happiness over meeting the President of the Islamic Republic of Iran and described the contract as a very important one, saying: “Today, we are very happy that we could finalise and execute the contract with the help of the authorities of the two countries”.

Stating that the JCPOA agreement has paved the way for further development of relations between European countries and Iran, he said: “We are optimistic about our cooperation with Iranian companies”.

“We seek a long-term cooperation with Iran,” continued Pouyanné.

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The increase in volumes since international sanctions against Tehran were lifted in January 2016 has made Iran the second-largest oil supplier to South Korea after Saudi Arabia, in the first quarter of 2017, reported Reuters quoting preliminary customs data on Saturday.

Iran was fifth-largest in the first quarter of 2016, behind Saudi Arabia, Iraq, Kuwait and Qatar, according to data from Korea National Oil Corp. (KNOC).

The official KNOC data ranked Iran as second-largest for the first two months of the year. KNOC figures for March and the quarter are due out in one week.

In March, the customs data showed South Korea imported 2.26 million tons of Iranian crude, or 534,368 barrels per day (bpd), up 118.8 percent from 1.03 million tons a year ago, reaching a record. That was up 38.3 percent from 1.63 million tons in February.

The world’s fifth-largest crude importer and one of Tehran’s biggest customers shipped in 5.68 million tons of Iranian crude in the first three months of 2017, or 463,234 bpd, up 92.4 percent from the 2.96 million tons imported during the same period a year ago.

Meanwhile, oil shipments from Saudi Arabia to South Kore, rose 10.9 percent to 3.52 million tons, or 831,413 bpd, in March on year. That was down 2.6 percent from 3.61 million tons a month ago as the world’s top oil exporter complies with the OPEC deal to cut supplies.

Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members reached an agreement to curb output last year by almost 1.8 mbd in the first half of 2017. Iran was exempted from the deal.

South Korea’s crude oil imports from Saudi Arabia fell 10 percent to 10.44 million tons in the first quarter of this year, or 850,614 bpd, from 11.61 million tons in the previous quarter, but that was 5.7 percent higher on year.

Overall, Asia’s fourth-largest economy brought in 12.68 million tons of crude oil in March this year, or nearly 3 mbd — up 10.1 percent from 11.52 million tons a year ago — according to the data.

For the first quarter of 2017, South Korea imported 36.94 million tons of crude, or 3.01 mbd, up 4.6 percent from 35.32 million tons a year earlier.

Final data for the country’s March crude oil imports will be released by state-run KNOC later this month.

Iran’s Oil Ministry said early this month that the country’s total exports of crude oil and condensates had exceeded three million barrels per day — a level not seen for at least the past six years.

Oil Minister Bijan Namdar Zanganeh said, “The pace of growth in Iran’s crude oil production and exports has amazed international observers who did not think Iran could raise its production by one million barrels per day within three to four months after the removal of sanctions.”

According to the ministry, almost a third of Iran’s oil exports, or over 700,000 bpd, is currently destined for Europe. The country exported around 600,000 bpd of oil to Europe during pre-sanctions years.

A top oil official said last December that Iran had started exports of condensate to Europe by sending a maiden cargo of one million barrels to certain EU clients.

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“We are increasing our oil output which will reach the designated production level,” Gholamreza Manouchehri, National Iranian Oil Company’s (NIOC) deputy head for engineering and development affairs told IRNA.

On November 30, 2016, the Petroleum Exporting Countries (OPEC) finalized an agreement to cut its overall production by 1.2 million barrels a day and set its new production ceiling at 32.5 million barrels a day as of January 2017.

The agreement, however, allowed Iran to raise production by 90,000 bpd to nearly four million barrels a day from January this year.

Manouchehri pointed to reports that Iran’s production ceiling has increased beyond the level set by OPEC saying the rise does not run counter to the terms of the agreement.

“Iran’s average oil production must only be below the level set by OPEC in a period of six months,” he added.

The November deal — the first in eight years — also granted Libya and Nigeria, which had seen their production drop due of armed conflict, an exemption from the cut.

Oil has rallied since November amid speculations that the supply cuts would boost prices. Some market analysts say that crude prices could reach $60-$70 a barrel in the coming months if the cuts are fully enforced.

Iran oil market upbeat

Since the lifting of sanctions began in January last year, the Islamic Republic has largely increased oil exports.

Speaking on the first anniversary of the implementation of the Iran nuclear deal in a gathering in Tehran on January 16, First Vice President Es’haq Jahangiri said that the exports of Iran’s oil and gas condensates are at their highest levels since the 1979 Islamic Revolution.

Tehran and the P5+1 — the US, Britain, France, China, Russia plus Germany — signed the nuclear accord known as the Joint Comprehensive Plan of Action (JCPOA), on July 14, 2015.

Under the landmark deal, which went into force on January 16, 2016, the Islamic Republic undertook to place restrictions on its nuclear program in exchange for the removal of nuclear-related sanctions against the country.

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Speaking to an IRIB TV, Bijan Zanganeh touched upon roots of the halt in gas imports from Turkmenistan while highlighting that the volume of gas purchase from the neighboring country had been negligible.

The official said National Iranian Gas Company had been put in charge of pursuing the issue of termination in gas imports from Turkmenistan asserting that Oil Ministry or the Government would not follow up the issue.

He stressed that Islamic Republic of Iran pursued the policy of holding friendly relations with all neighboring states; “existing dispute between NIGC and Türkmengaz need to be resolved.”

Later into his remarks, Zanganeh recalled that 11 new South Pars phases had come on stream over the past three years or will become operational in the present year; “phases 17, 18, 19, 20 and 21 will be inaugurated by the end of the current Iranian calendar year (to end March 20).”

The senior oil official further referred to the boost in production at West Karun joint oilfields saying “parallel with the rise in oil and gas production, implementation of Resistance Economy policies has been also put on the agenda of Oil Ministry.”

“Accordingly, gas transmission to villages is being undertaken,” highlighted Bijan Zanganeh adding that the gas transfer pipeline to Zahedan will be completed within months as promised earlier by the President.

He estimated that revenues from sales of crude oil and gas condensate will climb to about 41 billion dollars by the end of the ongoing Iranian year; “about 24.7 billion dollars of oil revenues were received in the first nine months of the present year.”

Oil Minister of Iran predicted that each baller of oil will be sold at 55 dollars adding “commitments of OPEC members to cap output became operational as of January 01.”

Zanganeh reassured that OPEC and non-OPEC members would meet their obligations as a result of which surplus of oil will be removed from the market giving way to a balance between supply and demand as well as to higher crude prices.

He recalled that oil prices were already enjoying an upward trend; “the present uplift in prices is rooted in effects exerted on market psychology by the freeze deal though more tangible outcomes are yet to be revealed once all partied curtail production.”

Oil minister deemed current market conditions as satisfactory and one the right path reiterating that “prices are not falling as even consumers would not favor very low figures.”

“Ultimately, producers and consumers have reached the consensus that low crude prices are contrary to interests of global economy, sustainable supply of energy and even production of new energies.”

At the end of his remarks, the official disavowed the claims that Iran’s oil revenues were blocked by certain countries concluding that “all profits from the sale of oil are being received smoothly.”

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“Iran’s crude and condensate exports surpassed 2.8 million barrels per day (bpd) in December 2016,” Amir Hossein Zamaninia said on Saturday.

Iran exported nearly 2.6 million bpd during the first 9 months of the current year, he added.

“In fact, Iran’s crude and condensate exports have been doubled following the implementation of Joint Comprehensive Plan of Action (JCPOA),” Zamaninia noted.

Iran’s crude and condensate exports surpassed 2.8 million bpd in December 2016 and exported nearly 2.6 million bpd during the first 9 months of the current Persian year.

In July 2015, Iran and the five permanent members of UN Security Council plus Germany clinched a deal following marathon talks.

Under the international agreement which was implemented in January 2016, Tehran agreed to put curbs on its nuclear program in exchange for the removal of unilateral sanctions.

In 2012, Iran’s energy sector was hit by the US-led sanctions, reducing the country’s crude exports from 2.5 million bpd to nearly 1 million barrels per day.

As a result of the sanctions imposed by the United States and the European Union, Iran’s exports of crude oil and condensate dropped to their lowest level since 1986.

The sanctions also negatively affected investment in Iran’s oil sector, cutting crude production sharply.

OPEC output cut deal

The recent boost in Iran’s oil sales comes against a backdrop of efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other major crude exporters to contain global supply glut to prop up prices.

Back in December, OPEC clinched a historic deal with Russia and other non-members to slash global production by nearly 1.8 million barrels a day for six months starting January.

OPEC exempted key member Iran from cutting output, allowing the country to increase its crude production by 90,000 bpd to reach pre-sanction output levels of 4 million bpd.

Iran’s Deputy Petroleum Minister for International Affairs and Trading Amir Hossein Zamaninia pointed to the recent deal and said Iran’s oil revenues will further increase in a foreseeable future.

Iran is now pumping 3.7 million barrels of crude oil per day in the post-sanctions era.

Tehran seeks to regain its market share of pre-sanctions levels of 4 million bpd.

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Iran’ light oil price stood at $40.12 on average since the beginning of 2016 until December 2.
The country also sold its heavy crude oil at $45.37 per barrel in the mentioned week, with $1.81 rise from its preceding week.

Iran’ heavy oil price stood at $38.14 on average since the beginning of 2016 until December 2.
Oil prices have soared as some of the world’s largest oil producers agreed to curb oil output for the first time since 2008 in a last-ditch bid to support prices.
The Organization of the Petroleum Exporting Countries (OPEC), which accounts for a third of global oil supply, agreed in Vienna on November 30 to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent, to 32.5 million bpd.
The cut will put production at the low end of a preliminary agreement struck in Algiers in September, and will reduce output from a current 33.64 million bpd.

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Iran’s output will be 3.797 million barrels per day per an agreement reached in the OPEC 171st ordinary meeting on Wednesday, November 30.

Hence, Iran’s average crude production level for the first half of 2017 will be 3.797 million barrels.

As of January 2017, Iran’s production will be 3.707 million per day, adding 90,000 barrels per day to the figure gradually.

Per OPEC approved table, Iran will be the only country to add to its production in the first six months of 2017: 90,000 barrels per day on the average. Iran’s average output level would not exceed 3.797 million barrels per day in the first six months of 2017.

Iran will be able to produce 3.9 million barrels per day oil in certain weeks in the first six months of 2017 but the average figure in the six-month period would not exceed 3.797 million per day.

Per OPEC agreement, Saudi Arabia should cut 486,000 barrels per day from its output to bring its output level overall to 10.058 million barrels per day.

The petroleum ministers of the Organization of the Petroleum Exporting Countries (OPEC) decided to curtail their total production by 1.2 million barrels a day.

For the first ever since 2008, OPEC will cut its production in consistency with the Algiers September 28 accord.

In accordance with the Algiers accord, the Organization’s output ranged between 32.5 million barrels per day to 33 million barrels per day.

Oil prices are predicted to rise after the November 30 agreement to 50 to 55 dollars a barrel.

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OPEC in a monthly report said it had recorded Iran’s new oil production capacity for September.

The country’s production in August stood at 3.634 mb/d, the Organization added in its report as reported by Azernews.az.

Iran is presently OPEC’s third largest producer after Saudi Arabia and Iraq.

It has repeatedly announced that it plans to increase its oil production to as high as 4 mb/d that existed before US-led sanctions imposed against it in 2011.

The sanctions mainly prevented foreign investments in Iran’s oil industry that it needed for its oil production. They also restricted the country’s oil exports to around 1 mb/d.

Before the sanctions were lifted, Iran said it had made the necessary preparations to boost its oil production capacity to pre-sanctions levels.

Iran’s Petroleum Minister Bijan Zangeneh had repeatedly emphasized that the Islamic Republic was determined to regain its share of the oil market that it had lost as a result of the sanctions within a short period of time.

Iranian oil sales have nearly doubled since sanctions were lifted on its oil exports in January 2016. In fact, Iran is recovering market share faster than many experts had expected, Azernews.az added in its report.

In early June, Reuters reported a rapid surge in Iran’s oil exports which in itself indicated a rise in the country’s oil production. Reuters said shipping data showed the country’s oil exports were close to pre-sanctions level of 2.5 million barrels per day, stressing that it had been able to improve its exports capabilities at a much faster pace than anticipated.

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He made the remarks in his speech to a group of the Petroleum Ministry officials.

Kardor said that Iran has been able to maintain its 14 percent quota in OPEC.

Let’s not forget that the rivals go on pumping oil and gas quickly, so Iran should not lag behind in producing oil and gas, Kardor said.

He said that Iran has also been able to raise its oil selling capacity to four million barrels.

‘Our oil production capacity should reach 5.2 or 5.7 million bpd.’

Kardor said Iran has over the past 11 years, embarked on horizontal drilling in South Pars layer for three times and only 700 meters were drilled due to lack of necessary technology. ‘Qatar, however, drilled 12 kms in joint oil layer horizontally and exploited 340,000 bpd oil.’

‘We should update our technology and regain our rights in the joint fields; Any claim that incentives will be given to the foreign executives is wrong. We do not accept it at all because as far as oil contracts are concerned, we will notify the foreign contractors of all our terms and conditions. Now, we should do something to make other countries dependent on us because a country like Saudi Arabia has a close watch on Iranian oil talks and contracts with other countries. Also, Saudi officials give highest amount of discount to foreign customers in a bid to create problems to Iranian oil industry. We should take back our part in the oil industry and support our oil and gas development with all might because we are progressive in economy. We have been able to improve the country’s economic growth with that amount of oil exports. The new model of oil contracts gives less than 8.2 percent share to foreigners and the remaining 92 percent of the privileges belongs to Iran government.’

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The No. 3 OPEC producer has more than doubled its crude exports, excluding the ultra light oil condensate, since December. Economic sanctions against Iran were lifted in January, and it has been working since then to regain market share lost to other Middle East producers over the previous four years, Reuters reported on Friday.

Members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia are expected to meet during the International Energy Forum in Algeria over September 26-28 to discuss a possible output freeze to stabilize oil prices that are still down.

“The only way for producers to maximize their revenues in a low oil price environment to meet budget requirements is to raise production,” said Victor Shum, an oil analyst at consultancy IHS. “So there is unlikely to be any supply deal … in late September,” he said.

“We can expect Iran to continue to raise production.”

August crude exports from Iran excluding condensate roughly doubled from a year ago to 2.11 mbd, the source said, based on data compiled from tanker loading schedules.

The crude exports have climbed from 1.9 mbd in June and 1.83 mbd in July, the schedules showed.

Iran’s August exports are the highest since January 2012, boosted by record purchases from the world’s third-largest oil importer India and a 48-percent jump that brought European sales to 630,000 bpd, tanker loadings for last month also showed.

Other sources tracking Iran’s shipping data or are familiar with its tanker loadings have slightly different figures for Iran’s crude exports in August, but still show a near doubling since January.

Details on condensate loadings for August remain unclear. However, if shipments of the ultra light oil were steady with this year’s average of nearly 310,000 bpd, the total crude and condensate exports last month would be this year’s highest at 2.41 mbd, still short of average pre-sanctions exports of 2.5 mbd to 2.6 mbd in 2011, according to figures from the US Energy Information Administration.

Iran’s crude exports excluding condensate to Asia in August were 1.48 mbd, up from 1.40 mbd in July and roughly steady to this year’s previous peak in April.

Loadings headed for India reached a likely record of nearly 600,000 bpd last month, according to data stretching back at least 15 years, up 150,000 bpd from July, and topping 564,000 bpd loaded for China.

Japanese loadings were nearly 230,000 bpd, compared with about 92,000 bpd for South Korea.

Iranian oil was also loaded for Turkey, Greece, and Spain, and exports to Italy more than doubled from the previous month to 87,000 bpd, according to the schedules.

To further boost exports, Iran expects to complete the building of a terminal by yearend for a new grade.

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