OPEC nod not needed to boost output: Iran
Tehran does not expect policy change at Dec 4 meeting
TEHRAN: Iran’s oil minister said yesterday he did not expect OPEC to change its output policy when it meets next month, and had told the exporting group of its own plans to boost production, for which it did not need permission. “To increase Iran’s oil production in the global market after the lifting of sanctions, we don’t need permission from the Organization of the Petroleum Exporting Countries (OPEC) or any other organization,” Iran’s oil minister, Bijan Zanganeh was quoted as saying by IRNA on the sidelines of the meeting of the Gas Exporting Countries Forum (GECF) in Tehran.
Asked if he expected OPEC to maintain its strategy at the meeting on Dec 4, he said: “I don’t expect to receive any new agreement.” It is expected that 2016 will be a tough year for the producer group when international sanctions on Iran are expected to ease, allowing it to boost oil production and exports.
Crude futures have already lost around 60 percent of their value since mid-2014 as supply exceeds demand by roughly 0.7 million to 2.5 million barrels per day to create a glut that analysts say will last well into 2016. Brent futures ended at $44.66 a barrel on Friday.
Tehran’s determination to reclaim its position as OPEC’s second largest producer has caused new tensions within the group. Zanganeh also said OPEC needed to manage the return of Iranian oil production within its current ceiling.
“OPEC is producing more than its ceiling and I asked them to reduce production and respect the ceiling, but it doesn’t mean that we don’t produce more because it is our right to return to the market and to preserve our rights and our share in the market,” he said.
Zanganeh was quoted by the ISNA news agency as saying: “Most of the OPEC members believe the fair oil price is $70.” Iran aims to raise oil output by 500,000 bpd as soon as sanctions are lifted in early 2016 and by one million bpd in March.
Iran’s new oil and gas contracts will have flexible terms that take into account oil price fluctuations and investment risks, a senior Iranian official told Reuters yesterday. Iran is trying to lure back international oil companies to develop its vast oil and gas reserves once sanctions are lifted under a deal with world powers. Iran will announce a new development contract model at conferences in Tehran on Nov 28-29 and in London in February.
“What we are offering is very flexible model of contracts, it is integrated exploration, development, production all those terms,” Mehdi Hosseini, head of Iran’s oil and gas contracts restructuring committee, told Reuters.” The fee per barrel that is paid as profit to the company is flexible based on the risk which is considered ... Higher risk, higher reward, lower risk, lower reward,” he said in an interview on the sidelines of a gas conference in Tehran.
“Anything will be adjusted, depending on the different stages of the operations...” Iran will offer some 52 oil and gas projects - both brown and green fields - including around 20 for exploration, he said. The contracts last for 20 years and “in some special cases it could also be extended to 25 years,” he said, not including a period for exploration deals.
“We are offering some projects in the Caspian sea and also very low-risk areas in the Gulf,” he said. Hosseini said there have been consultations with oil companies about the terms of new contracts where there will be no ceiling on the capex, one of the main points raised by some oil companies as a disadvantage in buy-back contracts Iran had offered in the past. “Everything depends on the behavior of the fields, and the period of time. If things change then they (oil companies) would have the chance annually in the annual work program and budget to revise the scope of the work, may revise the cost. We are very open,” he said. At the upcoming contracts conference in Tehran, the details of the deals will be discussed further. The new deals would be awarded either through bidding rounds or direct negotiations, Hosseini said. —Reuters
TEHRAN: A picture taken yesterday shows a general view of the extraordinary ministerial meeting of Gas Exporting Countries Forum (GECF) in the Iranian capital, Tehran. Iran is due to hold a third summit of Gas Exporting Countries Forum (GECF) in Tehran tomorrow. —AFP