2013-02-20 05:26:10 - New Energy research report from Business Monitor International is now available from Fast Market Research

BMI View: International sanctions remain in place, resulting in a sustained fall in oil export volumes and revenues. Due to significant obstacles for financing, due to both falling export revenues and sanctionsrelated challenges, investment the energy sector will remain strained. Indeed, gas export schemes and refinery expansion projects will make little progress as international oil company (IOC) partners heed the investment embargo, As such, the overall outlook will remain negative unless there is a breakthrough in Iran's negotiations with the international community over its nuclear programme. Meanwhile, Iran is claiming a succession of major oil and gas discoveries that, if proven, demonstrate considerable upside potential to its existing resource base.


Full Report Details at
- www.fastmr.com/prod/536477_iran_oil_gas_report_q1_2013.aspx


We highlight the following trends

and developments in Iran's oil and gas sector:

* BMI sees Iranian oil production declining significantly in 2012-13 as a result of international sanctions focused on preventing the Islamic Republic from selling its oil exports abroad. Indeed, we forecast more than a 20% fall in oil production from 2011 to 2012. Production will remain depressed over the course of 2013, only to pick up modestly over our forecast period. Production in 2017 is expected to be 3.78mn barrels per day (b/d), which is still over 10% below the 4.23mn b/d produced in 2011.
* US economic sanctions against Iran have slashed the volume of crude exported and oil revenues, the US Treasury said in mid-September 2012 as it vowed to keep up the pressure on Tehran to prevent the Iranian government from enriching uranium to make nuclear weapons. US efforts have paid off with Iranian crude exports falling to about 1mn b/d, the US Treasury said. We are forecasting that total net oil export will fall close to 3% in 2013, on top of the 37% fall in exports we estimate for 2012.
* Similarly, the outlook for sustained growth in gas exports has changed dramatically due to the impact of sanctions on foreign investment levels. For the foreseeable future, we see no progress in the development of liquefied natural gas (LNG) schemes, nor the gas field projects designed to supply the fuel. Gas production will continue to rise steadily, albeit modestly over the forecast period, at an average rate of 2% through to 2021.
* While fuel subsidy reforms have undermined the domestic oil consumption trend, we still expect the Iranian market to expand steadily, driving net crude oil exports down from 2.30mn b/d in 2011 to a low of 1.47mn b/d in 2013. A dramatically weakening rial on the back of sustained sanctions is putting significant pressure on the consumption of some refined products, however. For example, local Iranian airlines have increased fares significantly on the back of kerosene prices, which have risen over 80% in recent months.
* On May 10 2012, Iran's state news agency announced the discovery of 8-10bn barrels (bbl) of oil in an unnamed oilfield located within the Iranian sector of the Caspian Sea. After the 'huge light crude oil' discovery reported by Mehr in April 2012, this is the second reportedly substantial find to have been made in 2012. The Caspian oil discovery suggests that the total volume of resources found since 2009 - according to Iranian news sources - could easily exceed 53.06bn bbl of liquids and 3,500bn cubic metres (bcm) of gas.
* Turkmenistan reduced its natural gas exports to Iran by 52% in 2012 as compared to 2011 levels, providing now only between 4-5mcm/day. This is despite the country's obligations to provide Iran with 14bcm per year (approximately 40mcm/d). In response, the Iranian government and the National Iranian Gas Company have announced plans to reduce the country's dependency on Turkmen gas, although details were scant. Iranian gas dynamics are such that the country has an obligation to provide 10bcm of gas per year to Turkey. Amid rising natural gas consumption, it is therefore dependent upon the imports from Turkmenistan to meet its obligations.
* Based on an assumed 2012 average OPEC basket oil price of US$107.05/bbl, we are forecasting oil revenues for the year of US$59.10bn, and total hydrocarbons revenues of US$60.70bn. By 2016, assuming an average US$93.25/bbl, total revenues should be US$60.94bn, easing to US$57.11bn by 2021 (assuming an oil price of US$91.50/bbl).

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