IEA sees sharp rise in Iran oil output in 3-5 years post nuclear deal

Sun Apr 12, 2015 2:06pm EDT
 
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By Nidhi Verma

NEW DELHI (Reuters) - World oil markets will not see a significant rise in Iranian supplies for up to five years even if the OPEC member and world powers clinch a final nuclear deal by end-June, Fatih Birol chief economist and future head of International Energy Agency (IEA) said.

While the likelihood of an immediate jump in Iranian supplies looks slim, the chance of a steep fall in deliveries from other regions is rising as IEA estimates companies will cut investments by as much as $100 billion in 2015 in oil exploration and production due to lower prices.

Iran and six world powers reached a framework nuclear agreement on April 2, spurring hopes for a final deal by end-June that would lift economic sanctions imposed by the West against Tehran's disputed nuclear program.

"In three to five years we may see stronger (oil production) growth coming from Iran assuming Iran and global powers strike a final deal in June," Fatih Birol, who will head the IEA from September, told Reuters in an interview in New Delhi.

He said there may not be a big growth in Iranian oil production immediately as Tehran's huge and geological complex fields have not been maintained "in the best way" due to the sanctions.

Western sanctions have cut Iran's oil exports by more than half to around 1.1 million bpd from a pre-2012 level of 2.5 million bpd, with the loss of oil income making it difficult to invest in new development and pay for the equipment and services needed to keep its production operating smoothly.

Birol sees a limited impact of the lifting of sanctions on Iran on global oil prices, which have been halved since June on supply glut mainly from the United States.

Global economic growth mainly in Asia and Europe and investment in boosting oil output will be important factors determining movement in future global oil prices.   Continued...

 
Chief Economist of the International Energy Agency Fatih Birol speaks during a question and answer session at the Oil & Money conference in London October 1, 2013. REUTERS/Luke MacGregor