Iran signs $13bn new oil contracts

Iran has signed new contracts for the development of oil fields worth $13bn, planning to add 350,000 barrels per day (bpd) to daily production.

The deals are the biggest in the energy space for the past decade, state news agency Shana reported. They were all signed with local companies, according to oil minister Javad Owji.

The production increase effort will focus on six fields, including the biggest one that Iran shares with neighbor Iraq— Azadegan—and its oldest producing field, Masjed Soleyman. The latter is the oldest producing field in the Middle East, with a total output to date of over a billion barrels.

Iran has been working on boosting both its oil production and exports for a while now and the effort is paying off. Last year, the country exported 1.29mn bpd on average, which was 50% more than a year earlier. As before, most of this went to China.

As for production, as of January this year, this stood at 3.163mn barrels. This compares with over 4.3mn barrels daily before the US reimposed sanctions on Tehran, but there is space for growth.

According to Iran's former oil minister Bijan Zanganeh, this growth could take the average daily all the way to 7mn barrels in less than ten years. The boost would cost about $70bn, Zanganeh said recently, as quoted by Iran International.

Last year, Iran’s oil minister said the country’s oil production should rise to 3.6mn by the end of the Iranian calendar year, which ends this month. Output will probably fall short of that, as the latest monthly figures hover around 3.2mn barrels daily.

Last year’s exports, however, have topped the target for the next calendar year, which was set at 1.35mn barrels daily. The price, at which exports were calculated, was $65 per barrel.