Iran will begin selling a new grade of crude in March or April as it prepares to boost production once international sanctions blocking its oil exports are lifted, according to an official at state-run National Iranian Oil Company.
The Gulf state is increasing output at fields in the West Karoun region, near the Iraqi border. Most of the crude in the new blend will come from the Yadavaran, South Azadegan and North Azadegan fields, the NIOC official said, declining to be identified due to company policy.
Iran, OPEC’s second-biggest producer until sanctions were intensified in 2012, is planning to add new barrels to an already glutted global market. Benchmark Brent crude dropped 35 per cent last year as regional rival Saudi Arabia led the Organization of Petroleum Exporting Countries in pumping record amounts of oil to defend sales against output from producers outside the group, including US shale drillers.
Sanctions against Iran will end in “in a few days” and the coming year will be one of “economic revival,” President Hassan Rouhani said in a speech to open natural-gas facilities in the south of the country.
Iran, now the fifth-biggest of OPEC’s 13 members, may have trouble finding buyers for the new grade as it seeks to recoup the market share it lost under sanctions, according to consultants IHS Inc.
“It will be challenging,” Victor Shum, IHS’s head of oil market research, said by phone from Singapore. “It’s a new grade coming into an oversupplied market. It will have to be discounted.”
The new grade will probably compete mainly against Iraq’s Basrah Heavy crude for buyers in Asia, and Iran will have to sell it initially for less than the Iraqi blend, Shum said.
NIOC sees demand for the grade coming mostly from Asia, particularly India, with possible interest from refiners in Spain, the company official said.
The West Karoun fields will provide more than 1 million barrels of combined daily production after developments there are completed. NIOC hasn’t designated a name for the grade or determined how much of it will be available for sale.
The Yadavaran field will produce about 300,000 barrels a day upon completion of its three development phases, according to NIOC’s website. South Azadegan, which currently produces about 50,000 barrels a day, is set to pump as much as 600,000 barrels daily once two additional development phases are completed, according to the website. North Azadegan will produce about 30,000 barrels a day by the end of March, the website says.
Iran’s new grade will have a higher density than its Heavy blend and will be lighter than the Soroosh and Nowrooz crudes produced at eponymous fields in the Gulf, the NIOC official said.
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