Iran will probably struggle to restore lost crude production if it secures a deal to ease sanctions because the condition of halted fields will have deteriorated and more investment will be needed, according to Wood Mackenzie Ltd.
The country would be able to increase crude output by 120,000 barrels a day by the end of the year if it reaches an agreement on its nuclear program, according to a report by the Edinburgh-based consultant and Verisk Maplecroft. The report forecasts a further daily increase of 260,000 barrels by the end of 2016 and 220,000 barrels the following year.
Iran and world powers are working towards an agreement that would ease sanctions on the OPEC member’s oil sales in return for curtailing its nuclear activity. A “deal leading to the unwinding of sanctions is likely,” Wood Mackenzie estimates. Restrictions imposed on Iran’s oil trade in 2012 have curbed its shipments by about 50 percent.
“We have taken a conservative view of the pace of ramp-up of production should sanctions be removed,” Lindsay Grant, an analyst at Wood Mackenzie, said in an interview in London. “This is because of the uncertainty around the ability of the fields to produce at pre shut-in levels and whether or not there has been any reservoir or facility degradation.”
With sufficient investment by international oil companies, Iran could raise production to 4.4 million barrels a day by 2025, according to the report. The country will need to offer “competitive” terms to prospective investors because other producer nations are currently seeking investment, it said.