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Tuesday, November 27, 2012
Iran to slash oil sales outlook, store more as sanctions bite

Iran to slash oil sales outlook, store more as sanctions bite
Gulf Times - 27 November, 2012
http://gitm.kcorp.net/index.php?id=623715&news_type=Economy&lang=en

Iran's state budget for the next fiscal year may assume exports of just 1mn
barrels of oil a day, an Iranian budget planning commission member told the
semi-official Fars news agency yesterday, about half volumes shipped in
2011.

"Apparently, the government wants to decrease the 1392 (the next Iranian
year starting on March 21) state budgetís reliance on oil exports to 1mn
bpd," parliamentarian Gholamreza Mesbahi Moqaddam was quoted as saying by
Fars.

The International Energy Agency (IEA) estimates that Iranian oil exports
dipped below 1mn bpd over summer as US and European Union sanctions on
Tehran tightened.

According to official Iranian government data available through the Joint
Oil Data Initiative (JODI), Iran exported an average of just over 2mn bpd in
2011.

Iranian officials usually maintain that oil exports have not been
significantly affected by western sanctions aimed at stopping the countryís
disputed nuclear activities and say that the sanctions are an opportunity
for the country to wean itself off heavy dependence on oil.

The US government has focused on blocking Iranís oil exports because it
estimates that crude sales provide about half of Iranian government
revenues.

The IEA estimates that Iranian oil exports bounced to 1.3mn bpd in October.
But if the countryís budget planners are now expecting to sell only 1mn bpd
on average next year it implies Iran expects to make around $ 110mn less
each day from oil sales than before sanctions tightened in early 2012.

With exports down sharply and fewer oil tankers available to store the
excess, Iranís Press TV reported on Sunday that Iran plans to build millions
of barrels of additional storage facilities in the Gulf over the next few
months.

ďBy the middle of the next (Iran calendar) year (beginning March 20, 2013),
nearly 8.1mn barrels will be added to the crude oil storage capacity of
Iran,Ē Press TV reported the managing director of the Iranian Offshore Oil
Company (IOOC), Mahmoud Zirakchian-Zadeh, as saying.

Western governments led by the US have increased pressure on Iran this year
in an attempt to curb its nuclear programme that they say is includes atomic
weapons but Tehran says is peaceful. In early 2012, Iran used some of its
fleet of oil tankers to store crude it could not sell due to western
pressure on its customers to reduce their intake.

But the number of ships anchored off its main export terminal in the Gulf,
Kharg Island, has fallen sharply over the last few months, ship tracking
data shows, as Iranís state tanker company has had to use more of its own
vessels to deliver crude to buyers unable to obtain shipping insurance.

The IEA estimates that Iranian crude oil held in floating storage nearly
halved to 13mn barrels at the end of October from as high as 25-30mn in
April.

Although short-term reductions in production could give Iranís old oil wells
welcome rest, a prolonged reduction in output could cause long-term
production problems.

Iran has over 20mn barrels of onshore oil storage capacity at Kharg Island
and another 5mn at Lavan Island but these facilities are believed to have
been filled as Iranís exports have slid over the past year.

The additional storage to be built over the next year near the Bahregan oil
field in the northern Gulf would be enough to store less than three dayís of
the IEAís estimate of Iranian output of around 2.7mn bpd in October.

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