A report released by the Arab Petroleum Investments Corporation (APICORP) says that it will take “years rather than months” before Iran is able to achieve its full oil export capacity, local media reports.
Setbacks could been seen as a result of poor surface infrastructure conditions caused by sanctions, APICORP says, noting possible problems in accessing parts for pumps, compressors, valves, and other infrastructure needs.
“While preparation for this has been considerable, technical and commercial holdups are likely to mean the fruits of IOCs’ (international oil producers’) involvement will not be significant until the end of the decade,” explains APICORP.
Further, APICORP believes that Iran’s stated oil production targets are “overtly political and will be difficult to deliver,” although the organization notes that the government’s preparations since 2013 for the country’s re-entry into the market may provide some credibility to the country’s plans.
If Iranian supply growth surprises on the upside, it will exacerbate the global storage glut.
APICORP
“The lifting of restrictions on the import of drilling equipment banned under the sanctions regime may also allow optimization of existing production in a way that is difficult to foresee,” adds APICORP.
In the event that Iran is able to boost out by a greater margin than some believe is possible, APICORP agrees with those who say the additional barrels will keep oil, and by implication bunker prices, under pressure.
“If Iranian supply growth surprises on the upside, it will exacerbate the global storage glut, putting a cap on any price recovery,” said APICORP.