The Mirage Of An Iranian Oil Bonanza

Oilprice.com ^ | 03-09-2015 | Willem van Oranje

[bananaman22]

The P5+1 agreement with Iran on Iran’s nuclear program has generated (sometimes fevered) anticipation of an Iranian oil bonanza at the end of the nuclear agreement rainbow, both in terms of the increase in Iranian crude output and the business opportunities for foreign firms in driving the increase.

The anticipation comes from several sources. Iran’s crude potential is one. According to the U.S. Energy Information Administration (EIA), Iran’s proven crude reserves, 158 billion barrels, are the world’s fourth largest (and among the cheapest to produce at $8-to-$17/barrel, depending on the source,). Iranian public statements expressing determination to increase crude output significantly are another (to 5.7 mmbl/day, according to Mehdi Hosseini, chairman of Iran’s oil contracts restructuring committee). The third is the value of potential contracts for foreign suppliers. Hossein Zamaninia, Iran's deputy oil minister for commerce and international affairs, indicated the government hoped to conclude nearly 50 oil and gas projects worth $185 billion by 2020.

Projected Output and Exports to 2020

Projecting from International Energy Agency (IEA) data, Iran is on track to produce an average ~2.85 mmbl/day of crude in 2015. The IEA puts Iran’s current sustainable capacity at 3.6 mmbl/day (defined as a level achievable in 90 days and sustainable for an extended period). This is roughly comparable to Iranian Oil Minister Bijan Namdar Zanganeh’s assertion Iran could increase output 500,000 barrels per day within a few months after international sanctions on Iran’s economy are lifted and another 500,000 barrels per day in the following months .

[Idaho_Cowboy]

No peace for oil! Kerry did it for his oil buddies!