Iranian oil minister Masoud Mirkazemi Monday announced a 9% increase in
the OPEC's state's crude oil reserves to 150.31 billion barrels, putting
Iran's reserves above recently revised Iraqi reserve estimates and setting the
stage for what could potentially become a tussle over quotas.
Iran, already OPEC's second largest producer after Saudi Arabia and home
to the second biggest natural gas reserves after Russia, also revised its gas
reserve estimate to 33.1 trillion cubic meters.
"Today, our oil reserves have reached 150.31 billion barrels," Mirkazemi
told a news conference in Tehran. "With the exploration that we have made...by
the end of the year, it will become more," he added.
Mirkazemi also announced a major natural gas discovery.
He said the field, Sefid, was located in the southern province of
Hormuzgan along the strategic Strait of Hormuz and contained 70 billion cubic
meters of natural gas reserves, of which 72% was exploitable.
BP's latest statistical review puts Iranian gas reserves at end 2009 at
The move comes just weeks after Iraq, Iran's erstwhile enemy, raised its
proven crude oil reserve estimates by 25% to 143.1 billion barrels, pushing
Iraq up to second place after Saudi Arabia as holder of the second largest
conventional oil reserves globally.
The reserve issue is a sensitive one since it determines OPEC quotas,
which are allocated on a pro-rata basis. While Iraq is currently excluded from
OPEC output restrictions as it rebuilds its shattered energy industry, it was
previously allocated an equal quota to Iran's.
The issue is not likely to surface at this time since all indications are
that OPEC will maintain its current production ceiling and Iraq is still
producing below levels it attained in the months before the US-led invasion of
March 2003. OPEC officials have said there is no intention to bring Iraq back
into the quota system until its production rises to at least 4 million b/d.
Current Iraqi oil production is running at an average of around 2.4-2.5
million b/d, below the 3 million b/d it managed to attain before the 2003 war.
However, the Iraqi oil ministry has awarded contracts to international
consortia to develop its major oil fields with the aim of raising its
production to 12.5 million b/d within six to seven years. The first increments
are due to come online from the end of this year.
Iraqi oil minister Hussein al-Shahristani said on October 4, when he
announced the reserve hike, that the new information would be conveyed to the
OPEC secretariat in Vienna and suggested Iraq would seek a higher production
allocation on the basis of its higher reserves.
Mirkazemi said, however, that he did not expect OPEC to change its
current output target, which has been set at 24.845 million b/d since January
2009 and is widely expected to be rubber-stamped yet again by the 12-member
group though it will apply to just the 11 members bound by output restraint.
"I do not think that at the forthcoming OPEC meeting, a decision will be
made to increase production," Mirkazemi said Monday.
"Today demand is limited due to the global recession. Supply is
in accordance with demand and you know that OPEC had a 5 million barrel
supply cut," he added, referring to a decision by the producer group to slash
output by 4.2 million b/d from January 1 last year in an effort to shore up
oil prices, which had slumped to below $40/barrel by the end of 2008.
"I think there will be no change in the market and the recession will
remain," Mirkazemi said.
He also called for oil prices to be revised higher, saying that at
current levels, prices were too low in real terms.
"Oil prices need to be revised," he said, adding that based on 1970 or
1975 prices, the real price today would be closer to $11/b.
Oil prices have been trading in a range between $70/b and $80/b so far
this year though they rose above $80/b last week as the US dollar weakened.
While Iraq's oil production capacity has been constrained by years of
sanctions and conflict, including an eight-year war against Iran from
1980-1988, Iran is suffering from under-investment in its energy sector due to
sanctions that have recently been tightened over its controversial nuclear
Mirkazemi said Iran's crude oil production capacity was 4.2 million b/d.
The latest Platts estimate of OPEC's production put Iran's output in September
at 3.68 million b/d, slightly above its OPEC target and around the level that
analysts now believe is Iran's maximum sustained capacity.
REAL PRICE LOW
Iran's OPEC governor, Mohammad Ali Khatibi, was quoted Saturday as saying
that oil prices between $70/b and $80/b were "nominal" in what he said was an
oversupplied market, student news agency ISNA reported.
"In past weeks, crude oil prices have been between $70 and $80 in
different markets. These prices are nominal rather than real," Khatibi was
quoted as saying.
"If we compare these prices with real prices of past years, the maximum
[real] price is around $50/b," he added.
Khatibi said that some OPEC producers were "content" with these nominal
prices "but some countries believe that these prices are still very low."
The forthcoming OPEC meeting in Vienna on October 14 will consider market
conditions and make a decision on supply, Khatibi said, adding that markets
were currently oversupplied, with consumers stocking up for the northern
"At the next OPEC meeting, market conditions and consumption will be
evaluated and a decision will be made based on that. Because if crude oil
supply is higher than demand, the surplus oil will be stocked and this usually
pushes down prices," Khatibi said.
He said there were some market players building crude oil or product
stocks ahead of the cold season in order to make a profit later in the year.
"...this shows that there is still oil oversupply in the market."
Khatibi's assessment of the market was echoed by UAE oil minister
Mohammed bin Dhaen al-Hamli, who said in Kuwait on Saturday that global
inventories were still high.
Hamli is attending a meeting of Gulf Cooperation Council oil ministers,
who are holding an annual meeting to discuss coordinated energy policy among
the six members that make up the GCC. They include OPEC members Saudi Arabia,
Kuwait, the UAE and Qatar and non-OPEC producers Oman and Bahrain.
--Aresu Eqbali, email@example.com
Similar stories appear in Oilgram News.
See more information at http://www.platts.com/Products/oilgramnews/