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Iran's NIOC looks beyond US hostility

26 Sep 2017, 1.05 pm GMT

Iran's NIOC looks beyond US hostility

Singapore, 26 September (Argus) — Iran is unconcerned by the US administration's attitude towards the deal that saw US and EU nuclear-related sanctions lifted last year. And Tehran is confident that key members of the international community are committed to the multilateral agreement, state-owned NIOC's international affairs director Saeid Khoshrou said.

"From 40 years ago, Iran was always under the sanctions of the US and we are used to living with it," he said. The sanctions were painful but made Iran stronger, he added.

"This deal is not something with one country, it is with the international field, and it cannot be acceptable that one country can change the game on its own, especially someone like [US president Donald] Trump. I think Europe, Russia and China do not have to follow the US, especially Trump."

Iran can also take action against any US move, Khoshrou said, without specifying further.

Last week, Trump used his first speech before the UN General Assembly to renew his pledge to review the nuclear accord known as the Joint Comprehensive Plan of Action (JCPOA) between Iran and the US, UK, France, Germany, Russia and China, which was signed in July 2015.

The deal paved the way for the January 2016 lifting of US and EU sanctions targeting Iran's oil and banking industry, in return for curbs on Iran's nuclear programme.

Iran's crude production capacity is currently around 4mn b/d but is expected to reach 4.7mn by 2022, Khoshrou said. Domestic crude consumption is around 1.8mn b/d, he added. Iran's crude exports have recently stabilized at 2.2mn b/d, Khoshrou said.

During sanctions, production of crude oil was sometimes below 3mn b/d, Khoshrou said. But with the lifting of sanctions, production bounced back to 3.8mn b/d by the end of 2016 and has now reached 3.9mn b/d.

Iran has also managed to recapture its European market since the sanctions were lifted. The country exported 40pc of its crude to Europe in 2011, but Europe's share fell to just 14pc in 2012, Khoshrou said. So far this year, the country has exported 37pc of its crude to Europe this year. The Asia-Pacific region, which buys the bulk of Iran's exports, has taken 63pc of Iran's exports so far this year, Khoshrou said.

Increased capacity of secondary units in Asia-Pacific has boosted demand for heavy and extra-heavy oil and tightened supplies. Iran is concentrating its production plan on areas with heavy oil reserves to produce grades such as Cyrus and West Karun with gravity of 22-24°API.

Cyrus crude with 30,000 b/d of production is already being exported, while production from the West Karun cluster has reached 280,000 b/d. The West Karun grade will become Iran's newest crude export next year. The cluster is made up of large fields such as Azadegan, Yadavaran and Yaran that are key to Iran's planned crude capacity increases and is expected to increase to 700,000 b/d within three years, Khoshrou said.

NIOC managing director Ali Kardor said earlier this month that around 420,000 b/d of the 700,000 b/d or so capacity increase Iran is planning to achieve by 2022 will come from these West Karun fields. The remaining 280,000 b/d will come from onshore and offshore fields operated by NIOC subsidiaries Nisoc, ICOFC and IOOC.

Iran's condensates production is currently more than 800,000 b/d but is planned to increase to 1mn b/d by early-2019. From the current production, 700,000 b/d comes from the South Pars non-associated gas field, Khoshrou said.

Domestic condensate consumption is currently around 360,000 b/d but will increase once all the phases of the 360,000 b/d Persian Gulf Star splitter come online and the Siraf splitters with total capacity of 480,000 b/d are built. The first 120,000 b/d phase of the Persian Gulf refinery has reached full capacity, with the second and third phase coming online in six months and a year respectively, Khoshrou said.

Condensate exports are around 450,000 b/d but had been more than 700,000 b/d when Iran was drawing down its stocks that had built up during sanctions. The quick drawdown resulted in NIOC having to delay or cancel some condensate volumes promised to Asia-Pacific customers. Most of Iran's condensate exports have been going to condensate splitters in South Korea that have bought 58pc of Iran's exports so far this year, Khoshrou said. Mideast Gulf states bought 25pc and Japan 6pc of Iran's condensate exports.

Iran's resource base, low production costs and new upstream contracts should make it attractive to investors. NIOC has earmarked around 50 upstream oil and gas projects open to foreign oil and gas companies for investment, many of which are now being evaluated by firms with a view to future development.

A first major post-sanctions upstream contract was awarded to a consortium comprising France's Total, China's state-owned CNPC, and NIOC subsidiary Petropars to develop phase 11 of the giant South Pars gas field over a 20-year period. NIOC has set its sights on closing 10 more upstream contracts with foreign companies by the middle of next year.


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