Iran's Oil Production Is Drying Up

02/20/2007
Filed by Michael Roston

A report in today's Wall Street Journal paints a picture of an Iran in the early stages of an energy crisis. Although long considered an energy giant, the Persian Gulf country is facing the prospect of an oil output crash within a decade, and it may start rationing gasoline next month.

Bill Spindle writes in the Journal this morning that Iran's oil production is stagnating. Demand in the country is high because the government makes the price of gasoline very cheap. At the same time, "a combination of Western sanctions and Iranian policies has discouraged foreign investment in oil fields," resulting in a lull in production growth. The problem is so severe that Iran's government "shelled out at least $7 billion on gasoline imports alone so far this fiscal year."

In response, Iran is hoping to expand its production abilities. But the US government and others see political implications from the current state of affairs in the Iranian energy sector. "Iran's energy woes could make it more vulnerable to international
economic sanctions," Spindle writes. "Even many Iranian officials concede that
the longstanding ban the U.S. has placed on American oil companies working in
Iran has hampered the country's ability to develop its oil fields adequately."

The full article can be accessed by Wall Street Journal subscribers at this link. An excerpt is provided below.

At the same time, a combination of Western sanctions and Iranian policies has discouraged foreign investment in oil fields, causing production to stagnate. The result: Iran's oil exports could dry up in as little as a decade, according to some who have studied the situation. That's a looming disaster for Iran, which derives about 85% of its export income from the sale of oil. "The industry is in a crisis," says Mehdi Varzi, a
former Iranian diplomat and national oil company official who heads a London-based consulting company, Varzi Energy.

The impact would be felt far beyond Iran. The country produced 3.8 million barrels of oil a day in 2006, almost 5% of the world's total supply, according to the Organization of Petroleum Exporting Countries. It exported an average of about 2.5 million barrels of that each day. Should those sales decline, Iran's largest customers, Japan and China, would scramble for other supplies, pushing up prices for everyone.

Avoiding an export squeeze is one reason Iran argues it needs to consider nuclear energy. But that ambition has contributed to a diplomatic impasse with the West. Bush administration officials describe Iran's nuclear program as little more than a ruse to conceal what they say is a hidden effort to build nuclear weapons. Iranian officials deny that, arguing that nuclear plants could handle some of the soaring domestic energy demand, leaving more oil and gas to export and avoiding difficult domestic choices.

Saudi Arabia

01 - Saudi Arabia




Saudi Arabia, Russia, and Iran are in the "A" Group. These three will be considered swing production.


For a more detailed look at Saudi Oil Production click on this link:
http://saudioilproduction.blogspot.com







From CERA's 2005 Report:

Saudi Arabia is a key component of the outlook, and crude and
condensate capacity (excluding the Neutral Zone) will average 11.3 mbd in 2005
and rise slowly to 11.6 mbd by 2010 (see Figure 7a). Some concerns have been
expressed recently about the ability of Saudi Arabia to expand liquids capacity,
with some commentators suggesting an imminent, dramatic decline. CERA believes
that capacity will not decline until well beyond 2020, with efforts being made
by Saudi Arabia to both replace natural decline and add new capacity in order to
reach a target of 12.5 mbd if necessary by 2010, which the Saudis believe will
provide 1.5–2 mbd of surge capacity.* Having recently inaugurated the Abu
Safah/Qatif fields, the country is expected to expand Haradh Phase 3 (300,000
bd) in early 2006, Shaybah (300,000–900,000 bd) in 2008, and the Khursaniyah
field (500,000 bd of new capacity) by 2007. If needed, the Khurais field will be
brought back onstream at up to 1.2 mbd by 2010. However, CERA believes that this
latter addition will be ramped up slowly or delayed.

Russia

Number 2
Russia

Russian March Crude Oil Production Rises Annual 3.4 Percent

April 2 (Bloomberg) -- Russia, the world's second-largest oil supplier, produced 3.4 percent more crude oil and oil condensate in March than in the same month last year.

Crude output climbed to 9.87 million barrels a day (41.76 million tons) from 9.46 million barrels a day in the same month a year earlier, according to data released today by CDU TEK, the Energy Ministry's dispatch center.

The monthly gain was 0.1 percent, after the country produced 9.86 million barrels a day of crude in February.

Canada

07 Canada



From CERA's 2005 Report:

Canadian liquids capacity is projected to increase substantially from 3.48 mbd in 2005 to 4.70 mbd in 2010. As in the United States, there is one major contributor to this increase—in Canada’s case, it is the oil sands. Conventional liquid production, helped by growth of 0.3 mbd in the Newfoundland offshore, will remain essentially flat at 2.30 to 2.40 mbd through 2010. In addition to existing production at Hibernia and Terra Nova, the White Rose field will begin production early in 2006, and the Ben Nevis–Hebron field may be onstream by 2010, along with the shallow Avalon reservoir at Hibernia. Oil sands capacity is projected to increase by 1.12 mbd from 1.18 mbd in 2005 to 2.30 mbd in 2010. Mineable oil sands production is projected to increase from 0.67 mbd in 2005 to 1.20 mbd in 2010, led by expansions in the existing projects and initial production from the Horizon and Kearl Lake projects. Bitumen production from in-situ or steam assisted gravity drainage (SAGD) methods will increase from 0.51 mbd in 2005 to 1.10 mbd in 2010, led by expansions at Cold Lake, Christina Lake, Firebag, and Foster Creek, along with initial production from the Surmont, Long Lake, and Sunrise projects. In the next decade oil sands production is projected to reach 2.7 mbd in 2012 and 4.8 mbd by 2020.

Norway

08 Norway

Venezuela

09 Venezuela

United Arab Emirates

10 UAE

Kuwait

11 Kuwait

Iraq

Iraq, Nigeria, and Venezuela are in the "B" Group, aka the "P" Group. "P" for political.

Libya

Libya comes in at number 15 on the production list. Number 12 on the exporter list.

1,702 thousand barrels per day average in 2005 according to BP. According to BP this is also their recent peak production.

CERA has this to say:

Libya has suffered from two decades of underinvestment, but now that sanctions have been lifted, there is a feeling that it is "Aladdin’s cave waiting to be opened." Some US operators with major presanction positions have been negotiating to extend their old concessions, which were signed in the mid-1950s and are set to expire between end-2005 and early 2007 (Oasis Group–Conoco/Hess/Marathon and Zuetina Group–Oxy). The issue is not the principle of extension, but its length and the improvement of contractual terms. The Libyans held at the end of January the EPSA-1V upstream licensing round in which 15 new licenses were awarded. It marked the return of American companies, which won 10 out of the 15 areas. Although this round generated major interest, some notable companies either did not participate or bid unsuccessfully. Much of the country remains unexplored, and although non-US investors made progress during the period of sanctions, the level of investment was not enough to expand capacity significantly. Many of the fields are mature, and natural decline may be now be quite high as a result of underinvestment during the sanction period.

A further licensing round is anticipated to start in second quarter 2005, and a mature fields round is in expected in mid-2005. CERA anticipates that liquids capacity will climb from 1.95 mbd in 2005 to 2.47 mbd in 2010. Much of this gain will be sourced in the medium term from rehabilitation of the existing fields, especially those of the Oasis and Zuetina groups, but some capacity will be added from discoveries that will be made in the next two to three years. In the short term, liquids additions from the Elephant and El Saharah fields and the West Libya Gas Project will continue to expand. Perhaps the greatest constraint on progress will be the pace at which the Libyan authorities decide to manage the influx of new investment.

Further analysis:

The EIA has Libya at 1,633 C+C production for 2005, up slightly to 1,684 for 2006(thru November) - roughly in-line with BP numbers, when you figure 68kbpd NGL's(2004). So we're going to go with CERA's forecast to 2010 minus 200kbpd. So 2,270 for 2010. Moving up steadily.

Present production(2006) comes in under CERA's 2005 "capacity" forecast by 200kbpd. The question is whether or not to cut another 200Kbpd.

For now we will compromise at 100kbpd. So 2,170.

United Kingdom

17 United Kingdom

Qatar

20 Qatar

Oman

22 Oman

"D" Group.

Argentina

Number 24

Argentina

Currently, Argentina is an energy exporter, but perhaps not for long. According to the national statistical institute, INDEC, in October 2006 the difference between exports and imports for crude oil, natural gas, and electric energy was a positive $530 million. But oil production peaked in 1998 at 850,000 barrels of oil per day, and has declined since then to 700,000 barrels of oil per day. Oil companies have failed to increase production from mature onshore assets. The major stakeholders in Argentinean oil production are Repsol-YPF (a Spanish-owned company) with 41.5 percent of oil production, Pan American (U.S.-owned) with 16.9 percent, and Brazil’s Petrobras with almost 10 percent. Chevron controls 8.6 percent, and a number of smaller oil companies account for the remaining 23 percent.

http://www.energytribune.com/articles.cfm?aid=414

Egypt

26 Egypt

Australia

27 Australia

Group "D."

Columbia

28 Columbia

Group "D."

Ecuador

29 Ecuador

Group "I." Projected at 850 kbpd.

Gabon

35 Gabon

"D" Group.

Congo (Brazzaville)

36 Congo

Basically the same story as many African nations at one point. Same as EG is now, except on the decline. "D" Group.