Iran gives local companies $13bn to lift oil output

Shana/Mojtaba Mohammadgholi

• Target of extra 400,000 barrels a day
• ‘Biggest deals in past decade’
• Oil exports ‘without pause’ for past year

Iran has announced contracts with local companies worth more than $13 billion to boost its oil output.

The sanctions-hit country wants to develop six oil fields to add around 400,000 barrels per day (bpd) and will rely on domestic expertise, Iran’s official news agency, Shana reported on Sunday.

The agency said that the deals were the biggest in the past decade, without detailing how the projects would be funded.

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The state-owned National Iranian Oil Company signed four contracts, including an $11.5 billion deal with Dasht Azadegan Arvand Oil and Gas Development Company to develop the Azadegan oil field. 

The field is in West Karoun, near Iraq’s Majnoon field. Iran estimates it contains around 32 billion barrels of oil in place.

• Iran’s oil exports hit 5-year high despite US sanctions

• Growing ‘dark fleet’ carries sanctioned oil to China

• Opec set for tricky new year: US booms and demand slows

Other development contracts involve the second phase of the Masjed Soleyman oil field (Iran’s oldest) and the Azar, Soumar, Saman and Delavaran oil fields.

Iran produced 2.99 million bpd of oil last year, 440,000 barrels more than in 2022, according to the International Energy Agency.

The increase made Iran  the world’s second-largest source of supply growth after the US. The country is expected to increase production by a further 280,000 bpd this year.

While neighbouring countries are also working on increasing their production capacity, Saudi Arabia has halted its expansion plans. The UAE has set a target to boost its crude production capacity to 5 million bpd by 2027. Kuwait aims to increase total production capacity to 4 million bpd by 2035.

Iran’s crude oil exports grew 50 percent last year to a five-year high of 1.29 million bpd. This was despite the sanctions imposed by Western countries on Iran’s oil and petrochemical exports, in response to its nuclear programme.

The data consultancy Kpler estimates that around 90 percent of Iranian crude exports are sent to China. The oil is transported by a “dark fleet” of tankers that falsify their locations to evade sanctions.

The Iranian oil minister Javad Owji said during a signing ceremony between National Iranian Oil Company and Dasht Azadegan Arvand Oil and Gas on Sunday that Iran has exported oil without a pause since last March.

“Although the country’s oil industry experienced a year full of ups and downs, we found new markets and exported oil,” he said.

Last week, Iran announced deals worth $20 billion with domestic companies to boost output from the offshore South Pars gas field, which it shares with Qatar in the Gulf.