Commodities: Iran challenges US sanctions with plans to double oil output by 2018

Although meetings have taken place between some western oil executives and Iranian officials, little real progress has been made on the potential terms for contracts to develop new fields. A planned roadshow for Iran’s oil ministry to present the new contract terms it has been working on to oil companies that was scheduled for the first quarter in London was postponed.

Iranian officials have been looking at the contractual model used by Iraq to attract IOCs. Baghdad is planning to triple its production of crude to about 9m bpd by 2020 with the help of IOCs. Combined, Iran and Iraq could break Saudi Arabia’s world lead in production capacity by the end of the decade.

The IEA in its latest monthly report has revised up its estimates for the Iran’s exports in February to the highest levels in almost two years. According to the IEA, Iran shipped 1.65m bpd of crude in February, an increase of 240,000 bpd on its previous estimate.

Iran is only permitted to export an average of 1m bpd under the deal agreed with international powers last year as a stepping stone to the possible full lifting of sanctions, according to Reuters. The International Monetary Fund has said that Iran’s economy is already benefiting from the reduced sanctions agreed in November.

The rise in Iranian oil sales since the beginning of the year also comes as talks with the US and other powers enter a critical phase. Negotiations are expected to conclude in three months, but the latest round of meetings in Vienna has been complicated by the US government’s decision to withhold a visa for Iran’s proposed ambassador to the United Nations, Hamid Abutalebi and Russia’s actions in Ukraine.

Russia is understood to be working with Iran on a $20bn oil-barter deal that would bypass existing sanctions. The deal, which has enraged Washington, could result in Russia supplying Iran with equipment, according to Reuters.

Libyan oil Search for 'equal distribution’ after Gaddafi abuses

The trial of Muammar Gaddafi’s two remaining sons will begin in Tripoli this week, marking another chapter in the country’s troubled efforts to rebuild itself after the downfall of the former dictator and his family.

Both Saif al Islam and his brother Saadi Gaddafi represent the remnants of a brutal regime that committed atrocities and squandered Libya’s vast oil wealth.

However, three years after Gaddafi’s death, attempts are being made to ensure that future governments in the North African state won’t be able to control oil with such absolute power.

Fadeel Lameen, chairman of the National Dialogue Commission, heads an organisation funded by USAID, which is speaking to communities in 32 cities across Libya about what they want to see in a new constitution that would help to prevent the return of another Gaddafi-style regime. Mr Fadeel told the Telegraph recently that Libyans now want to see “equal distribution” of the country’s oil wealth and that oil contracts negotiated by the Gaddafi regime could fall under a future truth and reconciliation process in the country.

However, oil continues to be more of a divisive than unifying influence in Libya as local militias continue to restrict the nation’s exports. Libya exported 243,000 barrels per day (bpd) last month, down from 1.4m bpd in 2012.

Shale

The secretary general of the Organisation of Petroleum Exporting Countries (Opec) has questioned the sustainability of the shale oil and gas revolution under way in the US.

In a speech late last week in Paris, Abdalla Salem el-Badri said: “I think we can all recognise that there remain questions over how sustainable these tight oil developments will be in the long term.”

Mr el-Badri added that in many cases so called “tight” oil developments in shale areas of the US were already experiencing declines of 60pc after just one year of operation. He said that Opec estimates that US tight oil production will peak at 4.9m barrels per day and then decline from 2018.

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