Iran: decided increase in production. Falling Oil Prices?
Iran announced plans last week to increase oil production from its South Azadegan supergiant oil field to at least 320,000 barrels per day (bpd) by mid-2023, from the current 140,000 bpd. This production from southern Azadegan, and related increases in northern Azadegan and other major fields that make up the group of oil-rich fields in the western Karoun region, will enable Iran to reach its long-standing target of 1 million barrels per day. day from this specific region within the next year or so, according to recent comments by the CEO of the National Iranian Oil Company (NIOC), Mohsen Khojastehmehr.
Of course, Tehran's main customer is no stranger to the move: the energy minister recently met high-level representatives from the China National Petroleum Corporation (CNPC) to discuss the development status of West Karoun fields in general and fields of Azadegan south and north in particular. These areas are part of the 25-year supply agreement between Iran and China, according to which Beijing undertakes to purchase all oil and derived products with a minimum discount of 12% on international prices plus another 6-8% to compensate for the investment risk. By giving a good lesson to Europe, which focuses on "Spot" contracts, Beijing has thus ensured a stable supply with an average discount of $ 10.95 per barrel, to which all insurance and transport costs must be added, given that the 'Iran guarantees the exact same prices as the FOB with a CIF service.
In reality, China has not invested as much as it could in Iran: for example, the development of the large South Azadegan field, essential in Iran's production objectives, has been severely slowed down and the CNPC, the Chinese state oil company (the one that was for Italy ENI) did not undertake directly, but sent subsidiaries to act under limited contracts. All this in order not to further irritate the United States, still opponents of the Iranian government until the conclusion of the JPCOA agreements, the nuclear peace agreement. The funny thing is that these fields, now in the hands of the Chinese government, should have originally been developed by France's Total before the green conversion.
If the South Azadegan field also starts up, together with other related investments, Iranian hydrocarbon production would increase from the current 3.9 – 4 million barrels per day by another 1.3 – 1.7 million barrels per day. this increase, without a strong increase in demand, could lead to a price reduction identifiable between 5% and 10% in 2022. China would benefit above all.
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The article Iran: decided increase in production. Falling Oil Prices? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/iran-deciso-aumento-della-produzione-prezzi-petrolio-in-calo/ on Tue, 04 Jan 2022 10:00:24 +0000.