By Arsalan Shahla on 5/31/2021
(Bloomberg) – Iran’s oil minister said the country can increase its crude production rapidly, as world powers enter the final stages of negotiations to revive a 2015 nuclear accord with the Islamic Republic.
“The next Iranian government should make it a top priority to raise oil production to 6.5 million barrels a day,” Bijan Namdar Zanganeh told reporters in Tehran on Monday. Higher output will “improve the country’s security and political might.”
Iran’s daily production is only around 2.5 million barrels and it hasn’t reached levels of 6 million since the 1970s.
If the nuclear deal is revived, the U.S. would probably ease sanctions on Tehran’s oil, banking and shipping sectors, though it is unclear to what extent or how quickly that would happen.
Iran, whose economy has been battered by the U.S. penalties, is preparing to ramp up crude production and boost exports in anticipation of an agreement. Most oil analysts expect it would be able to increase output by 500,000 to 1 million barrels a day by the end of the year.
Zanganeh said Iran would have little difficulty finding buyers for any barrels it adds to the market. The country has already increased its exports this year, often by disguising the origin of the shipments. China has been the main buyer, while Indian refiners have said they will import Iranian crude once sanctions are lifted.
Iran holds presidential elections on June 18 and Tehran is keen to conclude the nuclear talks, which are being held in Vienna, before then. Iran’s President Hassan Rouhani is stepping down after serving two terms, though he will stay in office until around August. Zanganeh has said he will retire from government and won’t accept any offer from the new president to be a minister.
Iran’s main state energy company on Monday signed preliminary agreements with local firms to study the giant Azadegan oil field shared with Iraq.
National Iranian Oil Co. said the deals may boost Azadegan’s production capacity, without specifying by how much. The field can currently pump around 215,000 barrels a day.
Iran is increasingly reliant on local firms to develop its oil sector, with the sanctions having forced out foreign investors.
Persia Oil and Gas Industry Development Co. will study the northern section of Azadegan, while Petropars Ltd. and Petroiran Development Co. will work on the central section, NIOC said. Pasargad Energy Development Co. and Dana Energy will explore the southern stretch.
Azadegan has an estimated 32 billion barrels of oil reserves. Foreign companies may eventually be able to partner with local firms on the projects, according to Zanganeh.