TEHRAN (S&P Global Platts) — Iran’s natural gas production has reached a record high even as U.S. sanctions caused major international exploration companies to scale back their activities in the Islamic Republic.
Production has hit a record of 1.04 Bcm/d, Iran’s Minister of Petroleum Bijan Zanganeh said Sunday on the sidelines of a petrochemicals conference in Tehran. Iran in April last year officially began the long-delayed development of phase 11 of the giant South Pars gas field. Output in early 2020 was 670 million cm/d.
The original development contract signed in 2017 by France’s Total and China’s CNPC was taken over by leading Iranian contractor Petropars after U.S. sanctions were tightened under former President Donald Trump. First Total, one year after the signing, and later CNPC left the project, whose worth at the time was $4.9 billion. It was the second time Total had pulled out of this project since the first contract was signed in 2006 due to the U.S. sanctions.
Phase 11 is the last of the 24 phases in the massive offshore gas field, shared with Qatar, to go under development and is expected to produce 56 million cu m/d of gas.
Iran aimed to reach a record of 1 Bcm/d gas production in its 2020-21 year that started March 20, Zanganeh said in April.
He put the giant gas field’s output at 670 million cu m/d in early 2020. According to the oil ministry’s news service Shana, despite floods and the coronavirus crisis, the country’s total gas production stood at 725 million cu m/d over its 2019-20 New Year holiday in March 2020.
In March 2019-March 2020, Iran produced a total of 267 Bcm. The country’s gas production of around 280 billion-290 billion cu m per year was set to reach 500 billion cu m in 2041, which could earn the country $350 billion, Hassan Montazer-Torbati, managing director of the National Iranian Gas Co., said in a speech, according to an oil ministry report on Feb. 2, 2021.
Market Could Absorb More Iranian Oil
The oil market could absorb more crude oil from Iran if US sanctions are eased, according to Iran’s governor to OPEC.
"Even if we produce around 4 million b/d, it won’t be that considerable compared to our reverses,” Amirhussein Zamaninia, who is also Iran’s deputy oil minister for trade and international affairs, said on the sidelines of the petrochemicals conference. "Thus, the market will have room for the amount of oil we have for exports.”
Iran’s government has targeted 2.3 million b/d of exports if the sanctions are lifted. Pre-sanctions production capacity was 4 million b/d.
Iran’s crude and condensate exports, which averaged more than 1.7 million b/d in March 2019, slumped to around 800,000 b/d in recent months, according to S&P Global Platts estimates. Zanganeh said he would not confirm any figure for the OPEC member’s oil sales when asked about a member of parliament saying in January they were 900,000 b/d.
Iranian oil exports were as high as 2.6 million b/d in May 2018 when the U.S. withdrew from the Iran nuclear deal.
Asked if OPEC is concerned about new supply from Iran, Zamaninia said: "Our worry in OPEC and oil companies is both price and market. A delicate balance is needed here to be created. At the moment, given the decrease executed by OPEC, it seems that the balance has been created. And we hope this trend continues.”
Zanganeh said he would not talk about sanctions and that he has not seen "anything” about any OPEC+ members showing concern about new supply from Iran.
"We should see what happens,” he said, when asked if he expects OPEC and allies to raise production quotas at their next meeting, which will be held March 4 by videoconference to decide on April quotas.