Commodities: Iran challenges US sanctions with plans to double oil output by 2018

As already mentioned here a few times, third world countries have no bottom, thus making any sanctions against Iran’s oil industry worthless. The world has a high demand for oil and all sanctions will do is force the oil route to change direction towards another country.

Iran has unveiled plans to double its oil production by the end of the decade and, ignoring sanctions, pump billions of dollars of its currency reserves into developing its share of the world’s largest natural gas reservoir in the Persian Gulf.

The country’s new oil minister, Bijan Zanganeh, has set a new output target of 5.7m barrels per day (bpd) of crude by 2018, according to the official state-run news agency Shana. The latest figures produced by the Organisation of Petroleum Exporting Countries (Opec), show that Iran is currently pumping about 3m bpd of crude.

Tehran is also sending strong signals to the international community that it plans to press ahead with the development of vast natural gas reserves that it shares with Qatar in the Persian Gulf. Moshtaq Ali-Gohari, head of the National Iranian Oil Company, told Shana over the weekend that the Islamic republic plans to invest almost $14bn (£8.3bn) to develop oil and gas fields that it shares with neighbours in the region. This could signal that Tehran is preparing for the further development of the South Pars field in the Gulf.

South Pars, combined with Qatar’s North Dome area, is estimated by the International Energy Agency (IEA) to hold 1,800 trillion cubic feet of natural gas and 51bn barrels of natural gas condensate – a high-value type of petroleum. The area has made Qatar the largest shipper of liquefied natural gas (LNG) in the world and a global energy superpower. Discovered in 1990, the development of South Pars area has been plagued by technical problems, contractual disputes and the imposition of sanctions that forced international oil companies (IOCs) to step back.

However, it is unlikely that Iran will be able to boost its oil production, or further develop South Pars without the help of IOCs. Companies such as Royal Dutch Shell, Total and BP are currently locked out by sanctions aimed at reining in Tehran’s nuclear ambitions. After an initial deal was reached with the US and other major powers last year to partially lift sanctions, progress has slowed.

The IEA in its latest monthly report has revised up its estimates for the Iran’s exports in February to the highest levels in almost two years. According to the IEA, Iran shipped 1.65m bpd of crude in February, an increase of 240,000 bpd on its previous estimate.

Iran is only permitted to export an average of 1m bpd under the deal agreed with international powers last year as a stepping stone to the possible full lifting of sanctions, according to Reuters. The International Monetary Fund has said that Iran’s economy is already benefiting from the reduced sanctions agreed in November.

The rise in Iranian oil sales since the beginning of the year also comes as talks with the US and other powers enter a critical phase. Negotiations are expected to conclude in three months, but the latest round of meetings in Vienna has been complicated by the US government’s decision to withhold a visa for Iran’s proposed ambassador to the United Nations, Hamid Abutalebi and Russia’s actions in Ukraine.

Russia is understood to be working with Iran on a $20bn oil-barter deal that would bypass existing sanctions. The deal, which has enraged Washington, could result in Russia supplying Iran with equipment, according to Reuters.

 

Full article: Commodities: Iran challenges US sanctions with plans to double oil output by 2018 (The Telegraph)

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