OPEC nod not needed to boost out­put: Iran

Tehran does not ex­pect pol­icy change at Dec 4 meet­ing

Kuwait Times - - BUSINESS -

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.

Price flex­i­bil­ity

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

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