EDINBURGH, UK – Analyst Wood Mackenzie says it could take Iran until end-2017 to lift its production by 600,000 b/d, despite Tuesday’s agreement by the world’s major powers to lift sanctions over the country’s nuclear activity.
The deal is pending approval from the US Congress and the Iranian Majles (parliament), and Iran enacting the requested measures.
Since sanctions started in 2010, Iran’s crude oil exports have halved to 1.1 MMb/d, the analyst says, and its production has shrunk by 1 MMb/d. But even if all parties approve the deal, the legal process to remove sanctions could take several months, although Wood Mackenzie assumes they would be fully lifted by mid-2016.
As for reviving field development, Wood Mackenzie says it is uncertain whether there has been any degradation of Iran’s reservoirs and facilities since production was shut in.
While well shut-ins may have increased reservoir pressure, it could be hard to reverse the production decline quickly without additional gas re-injection or more enhanced oil recovery schemes.
However, there is potential for very large-scale investment with three quarters of Iran’s oil and gas reserves still to be produced. The country is set to unveil new upstream fiscal terms late this year and various NOCs and IOCs, including Shell, Total and Eni, are thought to be interested.
But it could still take years for IOCs to gain access to projects and to have an impact on production capacity, the analyst claims, even if fiscal terms are set at internationally competitive levels.