The preliminary agreements reached Iran and the “six” of international mediators, open up the possibility for lifting the sanctions against the Islamic Republic of Iran’s oil and access to the global market. But even if this happens in the end of June, the effect of lifting the embargo will affect the oil market until early 2016, experts believe. A restoration of Iranian exports to predsanktsionnogo level takes more time than say the authorities.
History embargo
The embargo in its current form happened in 2012 – the EU imposed a ban on imports of Iranian oil, the United States (which banned its companies to buy Iranian oil in the late 1980s) entered secondary sanctions – designed to overlap purchases of Iranian oil by third countries.
In eventually the export of oil from Iran fell by more than half – from 2.5 million barrels. a day in 2011 to 1.1 million barrels. per day in 2013 (the first full year after the embargo). As a result, Iran dropped from second place on the list of the largest producers of oil among OPEC members to fifth (after Saudi Arabia, Iraq, Kuwait and the United Arab Emirates).
Until mid-2012, when it was established the embargo, the Islamic Republic delivered oil in 21 countries. After easing of sanctions in November 2013 an opportunity to buy Iranian oil received six countries – China, India, Japan, South Korea, Turkey and Taiwan.
The US sanctions do not apply to supplies of Iranian condensate is used as a raw material for the production of gasoline and petrochemical products, if customers are no alternative sources of supply of this type of hydrocarbons. In January-May 2014 the export of oil and condensate from Iran increased by 300 thousand. Barrels. a day to 1.4 million barrels. per day on an annual basis (data IEA). Almost all of the increase came in exports to China and India. If we talk about the export of crude oil only, Bloomberg calculations leads JODI, which in December 2014 and January 2015, its supplies from Iran accounted for 1.33 million barrels stable. every day.
New blow for prices
The news about the prospect of lifting the sanctions on Thursday briefly collapses oil quotations by 4 %. If the planned agreement in the end will come into force, the next few months the oil market will remain in volatility predicts Thomas Pugh, a columnist for the commodity markets in the Capital Economics. Under these conditions, in the short term, prices have fallen by $ 10 or even $ 20 a barrel, immediately after which, probably followed by a rebound, the expert said.
With the return of Iranian supplies to the market price of oil will fall to $ 10 barrel, Bloomberg evaluation results of two American officials.
Dominic Chirichella, a partner at New York Institute of Energy Management, believes that with the approach of June, the market is expected to increase supplies from Iran, will come again in excitement. “Another failure of the Saudis to reduce the quota will be the last nail in the coffin of OPEC, that is, some of its members will act on its own to support the market.” Cartel, led by Saudi Arabia’s time to think about production cuts, agrees John Kilduff, a partner at hedge fund Again Capital.
Maxim Nechaev, consulting director of the Russian branch IHS CERA, also believes that traders will be taken into account in the price additional volumes of oil that will go on the market, even before the sanctions will be really taken off. If the volumes of the new Iranian oil will be reevaluated, may be followed by a significant reduction in the futures market and even reversal – of a situation where the current oil prices on the stock exchange futures prices lower supply in the opposite. “Such expectations – sure analyst – in the short term may trigger a new round of lower oil prices – it can update the lows near $ 40 a barrel. But after a more sober assessment of the possibility of increasing production Iran price is likely to go down in the range of $ 50-60 ».
Nechaev believes that to a significant growth in demand from primarily China and Europe, the price will be in this range. With its short-term increase, for example as a result of geopolitical crisis, manufacturers of oil shale in the United States can begin to deliver new volumes on the market within three to four weeks, which will return the price of the specified range. At the same time, the resumption of high economic growth in China and Europe emerges from recession will push oil prices higher. By 2020, they are likely to have come close to the level of $ 90-95 per barrel.
Russian Deputy Prime Minister Arkady Dvorkovich said on April 3 that even considering entering the market of oil from Iran, the average oil price in 2015 could reach $ 50 per barrel.
The Iranian factor will put additional pressure on prices, with the result that by the end of the year they could drop below $ 50 a barrel, according to consulting partner RusEnergy Michael Krutikhin.
Deferred effect
In the middle of March, Iranian Oil Minister Bijan Namdar Zanganeh said that his country was able to increase the export of oil by 1 million barrels. a day for a few months after the lifting of the embargo.
Experts give more restrained assessment. Iran will not be able to quickly increase production, even if the sanctions are lifted, and foreign companies will continue to be cautious about potential investments, says Michael Cohen, head of energy market analysts bank Barclays. “It remains unclear whether the abolition of the will of the oil embargo in the list of restrictions to be lifted in the first place” – said the expert.
Within 90 days after the lifting of sanctions, Iran will be able to supply the market with about 500 thousand. Barrels. of oil per day, according to Tim Bersma Acting Director of the program “Energy and Climate” Brookings Institution. “In addition, the country may lose market 30 million barrels. Oil, which has reportedly now in stores, “- added Bersma.
According to the calculations of the bank ANZ, Iran keeps 30 million barrels of oil tankers. oil. Brokerage Company EA Gibson Shipbrokers Ltd believes that the amount of 34.5 million barrels. According to estimates of the US administration, the volume of oil stored in tankers and terrestrial reservoirs of Iran is of the order of 7-17 million barrels. “The country can quickly flood the already crowded market of oil” – the report says ANZ. However, if Iran and increase exports, it is not until the second half of 2015, analysts said ANZ and Goldman Sachs.
«Iran will not be able to return quickly to the market. First, they will be put on the market stockpiled – somewhere 37-38 million barrels. “- Sure Krutikhin of RusEnergy. In late March, an unnamed source in the US administration told Bloomberg, that if an agreement with Iran will be concluded by the end of June, the first oil from the country will go to the international market only after three to six months after it was signed.
«Tehran be able to increase oil exports by about 300-500 thousand. barrels. per day, but only in the medium term, for six months – said RBC Nechayev of IHS CERA. – A more substantial increase in production is possible in the long term: Iran has yet to persuade the international oil community in the economic attractiveness of new integrated contracts that Tehran has developed urgently to replace the current buy-back contracts with low profitability, short lead times and high licensing requirements and volumes share of funding projects ».
In the end, the Iranian oil will go to the international market not earlier than technical experts agree mechanisms abolition of restrictions imposed on the country. This is sure a former adviser to the US Treasury Elizabeth Rosenberg: “Traders do not expect that the Iranian oil immediately rush to market a torrent.” To verify the extent to which Iran fulfills the conditions of the new agreement on its nuclear program, will take months, so most likely, sanctions will be lifted before the end of 2015 – beginning of 2016, says Bob McNally, president of research firm Rapidan Group.
Million in five years
If Iran becomes open to investment and improve conditions for doing business by foreign companies, the oil production in the country expects rapid growth, says Leonardo Maugeri, a research fellow at Harvard School of Public Administration. So that the country could increase production by 1 million barrels. a day, take five years and $ 50 billion investment. According to calculations by Robin Mills, analyst Manaar Energy Consulting, Iran could produce 5 million barrels. per day, need five years and $ 50 billion of investment.
According to Michael Krutikhin of RusEnergy, to increase production by 1-1.5 million barrels. per day, Iran took a year and a half. “They will be able to increase the figure to 3.5-4 million barrels. a day when introducing new technologies (to stimulate deposits, acid fracturing), “- explains the expert. According to Bloomberg, in February, Iran was producing 2.8 million barrels. per day compared to 3.6 million barrels. a day at the end of 2011.
Before the last OPEC meeting in November last year, Minister of Oil Industry of Bijan Namdar Zangane met with representatives of BP, Shell, Total SA and Lukoil. According to the official, all the companies have expressed interest in working in Iran if sanctions were lifted.
LUKoil representative told RBC that the company retains an interest in the Iranian project “Anaran” frozen after administration sanctions. A source close to LUKOIL, told RBC that, apparently, the first stage of cooperation with Iran in the event of cancellation of the restrictive measures will be cooperation in exploration projects.
«Zarubezhneft” is interested in continuing cooperation with Iranian companies after the lifting of sanctions in this country, said RBC spokesman “Zarubezhneft” Rustam Kazharov. He explained that the prospect of resuming participation in previous projects will depend on the new conditions that will offer partners. According to him, the company maintains an ongoing dialogue with the Iranian partners. “Zarubezhneft” and the Iranian national oil company NIOC in 2013 signed a memorandum of cooperation and assist each other in the development field.
This document is intended to co-development of the site Khayyam field Asaluyeh stocks Khayyam account for 260 billion cubic meters. meters of gas and 220 million tons of gas condensate. According to the plans of Tehran in the area is planned to produce per day to 24 million cubic meters. meters of gas, ie, 8.76 billion cubic meters. m per year.
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