EMEA News
APICORP: It Will Take "Years Rather than Months" For Iran to Reach Full Oil Export Capacity
A report released by the Arab Petroleum Investments Corporation (APICORP) says that it will take "years rather than months" before Iran is able to achieve its full oil export capacity, local media reports.
Set backs could been seen as a result of poor surface infrastructure conditions caused by sanctions, APICORP says, noting possible problems in accessing parts for pumps, compressors, valves, and other infrastructure needs.
"While preparation for this has been considerable, technical and commercial holdups are likely to mean the fruits of IOCs' (international oil producers') involvement will not be significant until the end of the decade," explains APICORP.
Further, APICORP believes that Iran's stated oil production targets are "overtly political and will be difficult to deliver," although the organisation notes that the government's preparations since 2013 for the country's re-entry into the market may provide some credibility to the country's plans.
"The lifting of restrictions on the import of drilling equipment banned under the sanctions regime may also allow optimization of existing production in a way that is difficult to foresee," adds APICORP.
In the event that Iran is able to boost out by a greater margin than some believe is possible, APICORP agrees with those who say the additional barrels will keep oil, and by implication bunker prices, under pressure.
"If Iranian supply growth surprises on the upside, it will exacerbate the global storage glut, putting a cap on any price recovery," said APICORP.
However, while there are worries the Organization of Petroleum Exporting Countries (OPEC) could implement measures for supply management, APICORP's report also suggests that the increased Iranian supply to the market could also be beneficial to Middle East producers, helping ease projected new oil supply loss from non-OPEC producers after 2017.
"A rebalancing away from non-OPEC oil to (Middle East and North Africa) MENA's low-cost reserve base, combined with resurgent price-driven demand growth, will, APICORP believes, help make room for at least some of Iran's additional barrels," stated APICORP.
On Wednesday, it was reported that Iran's oil minister, Bijan Namdar Zanganeh, says he is set to notify OPEC at the group's December meeting that the country is planning to raise its crude output by 500,000 barrels per day (bpd) in early 2016
