New Market Report: Iran Oil & Gas Report Q3 2012

Fast Market Research recommends "Iran Oil & Gas Report Q3 2012" from Business Monitor International, now available

by Bill Thompson

(WireNews+Co) - Boston, MA - 21 October 2012

BMI View: Sanctions on the country are now beginning to bite, with a resultant fall in oil export volumes and revenues. Gas export schemes and refinery expansion projects will make little progress as international oil company (IOC) partners heed the investment embargo, so the overall outlook will continue to deteriorate without a breakthrough in the nuclear stalemate. Meanwhile, Iran is claiming a succession of major oil and gas discoveries that, if proven, demonstrate considerable upside potential to its existing resource base.

We highlight the following trends and developments in Iran's oil and gas sector:

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- BMI sees Iranian oil production declining in 2012-13 owing to the effects of international sanctions on exports, although the 'end game' between Iran and the West is unpredictable at this stage. Liquids output is seen at 3.60mn barrels per day (b/d) in 2012 and 3.40mn b/d in 2013. Assuming a successful resolution of the situation and the lifting of sanctions, we now forecast liquids output recovering to 3.74mn b/d by 2016 and to 3.90mn b/d by 2021.
- While fuel subsidy reforms have undermined the domestic oil consumption trend, we still expect to see steady expansion of the Iranian market, driving net crude oil exports down from 2.30mn b/d in 2011 to a low of 1.52mn b/d in 2013.
- The outlook for dramatic and sustained growth in gas exports has changed dramatically with the impact of sanctions on foreign investment levels. For the foreseeable future, we see no progress in the development of liquefied natural gas (LNG) schemes, nor the gas field projects designed to supply the fuel. Net gas exports now look set to remain at a very modest level until Iran resolves its issues with the Western world.
- On May 10 2012, Iran's state news agency announced the discovery of 8-10bn barrels (bbl) of oil in an unnamed oilfield located within the Iranian sector of the Caspian Sea. After the 'huge light crude oil' discovery reported by Mehr in April 2012, this is the second reportedly substantial find to have been made in 2012. The Caspian oil discovery suggests that the total volume of resources found since 2009 - according to Iranian news sources - could easily exceed 53.06bn bbl of liquids and 3,500bn cubic metres (bcm) of gas.
- Based on an assumed 2012 average OPEC basket oil price of US$111.47/bbl, we are forecasting oil revenues for the year of US$70.9bn, and total hydrocarbons revenues of US$72.6bn. By 2016, assuming an average US$99.00/bbl, total revenues should be US$64.7bn, easing to US$60.5bn by 2021 (assuming an oil price of US$97.00/bbl).

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