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EghtesadOnline: The economy will struggle if the oil industry, the engine of economic growth, does not get the long-awaited impetus after years of underinvestment.

Oil Minister Bijan Namdar Zanganeh made the statement on the sidelines of the opening ceremony of the 22nd International Iran Oil, Gas, Refining and Petrochemical Exhibition in Tehran on Saturday.

Iran Oil Show, the four-day exhibit, is host to more than 2,000 domestic and international companies.

"An estimated $80 billion worth of agreements will be signed over the next two years, of which $50 billion is expected to be spent on domestic development projects, which will create lots of jobs," Financial Tribune quoted Zanganeh as saying.

He cautioned that contracts with multinationals should not be translated as relying on foreign expertise and workforce because domestic manufacturers and contractors will get the lion's share of work in the new energy projects.

"The oil industry is gearing up for a big leap forward," the minister noted, adding that local contractors' capacity "is incomparable with the past", which will help them play a key role alongside multinationals in oil and gas projects.

According to officials, companies from Germany, China, South Korea, Turkey, Italy, Spain, France, India, the UK and Japan, are participating in the annual oil expo.

 

Qatar Calling

Pointing to South Pars Gas Field production that has doubled in the past four years, standing at 575 million cubic meters per day, Zanganeh asserted, "They (Qatar) have approached us to form a joint technical committee to make it clear how much each country should be allowed to produce from the joint field. This happened soon after we matched their production rate.

"Ten years ago when we lagged in production, they would not even bother to reply to our letters. It is our economic and technical strength that can bring rivals to the negotiating table and such gains cannot be achieved by just raising our voice."

The minister reiterated Tehran's willingness to support a global pact between OPEC and non-OPEC producers to scale back crude oil output.

"Iran will go along with whatever decision OPEC makes at its meeting later this month on whether to extend oil production cuts beyond June," he said, noting that all indications are that the members want a renewal of the deal and we will go along with what they agree."

OPEC members reached an agreement in Vienna last year to reduce output by 1.2 million barrels daily, effective in the first half of 2017, with Saudi Arabia shouldering nearly 40% of the burden. Thirteen non-members, including Russia, vowed to extend cuts by an additional 558,000 barrels per day to ease a global glut.

Zanganeh also said he expects oil to trade at $55 a barrel, though he did not say for what period. OPEC meets on May 25 in Vienna to discuss the output cuts.

"Iran’s oil exports now stand at about 2.5 million barrels a day," Zanganeh said, adding that producers outside OPEC that joined the oil pact will probably agree to keep the cuts for longer.

According to Zanganeh, increasing the speed of oil extraction from joint oil fields in West Karoun namely Azadegan, Yaran and Yadavaran has been one of the most notable achievements of the government in the last 3 years.

"We pumped 70,000 barrels per day from the fields in 2013. Nonetheless, the figure reached 270,000 bpd in 2016. The National Iranian Oil Company started to extract oil from the South Pars oil layer for the first time in April.

Iran oil Iran oil industry Iran oil investments