19 July 1996

The Iranian Oil Ministry has adopted a policy of offence being the best form of defence, offering foreign companies new projects even as the US tightens sanctions designed to cripple the industry. The new projects follow 11 schemes tendered in 1995 and include oil and gas fields and pipelines.

The US will face serious problems enforcing its latest sanctions legislation, but experts point out that even 100 per cent effective sanctions would not affect Iran's ability to produce at its existing OPEC quota of 3.6 million b/d for another decade. A more immediate concern for Iran is its ability to keep domestic consumption from rising too fast beyond its present 1.1 million b/d by continuing to reduce price subsidies and substituting gas for crude.

The ministry claims a sustainable oil output capacity of 4.3 million b/d as of June 1996, nearly 200,000 b/d more than claimed in the previous year and due mostly to restoration of offshore capacity.

Plans to raise sustainable capacity to 4.5 million b/d (with an extra 500,000 b/d for emergencies) by 2000 may not proceed smoothly because of US pressure on international oil companies. Some 120,000 b/d are likely to be added by the end of the decade when the Sirri A and E offshore fields are brought on stream by France's Total, which was awarded a $600 million contract in 1995. However, 10 other schemes tendered in 1995 may have to be stretched out because of difficulties created by the US sanctions (MEED 28:7:95, page 7).

This has not prevented the ministry from expanding the list by adding several new schemes, including a package of five oil and gas fields in the Hormuz Strait which contain 300-500 million barrels of recoverable reserves. The fields are said to have potential crude production of 80,000 b/d and were considered by Japan's Japex in the early 1990s.

The gas condensate field known as G Field, which contains 20 million million cubic feet of liquefied natural gas reserves, will also be on offer. The field is close to the big South Pars gas field, one of the projects already tendered.

Iran is keen to remind everyone that it has OPEC's third biggest crude reserves, at just over 90,000 million barrels, and the world's second biggest gas reserves after Russia. In June, Oil Minister Gholamreza Aqazadeh said new studies indicated that the South Pars gas field, Iran's section of Qatar's North Field, may be three times bigger than estimated.

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