Iran says it will need at least $150 billion to implement a complete modernization of its oil industry within the next five years.
Mehdi Hosseini, a top advisor to Iran’s Oil Minister Bijan Zangeneh, said the required funds will be spent on a wide range of activities including increasing Iran’s oil output as well as developing LNG projects and other downstream plans.
Hosseini said Iran offers unique advantages to oil investors that include lower production costs, an easy access to free waterways, expert local workforce and modern infrastructure facilities.
“I believe Iran has many [oil and gas] projects that have low production costs and are highly profitable,” he has been quoted as saying by IRNA.
“This can help offset many of the investors’ problems that include decreasing oil prices, high project costs, low financial resources and a waning interest of banks in giving loans to companies for oil projects,” said Hosseini.
He further emphasized that Iran’s return to the market will not push down oil prices.
“New supplies from Iran may in the first place cause the prices to decrease,” Hosseini said. “However, it appears that US shale production will at the same time decrease by at least 500,000 barrels per day (bpd) in 2016 as a result of high production costs and a lack of funds. It will be then that the production from Iran will fill the gap thus created,” he added.
Hosseini further emphasized that Iran plans to increase its oil production in three phases.
Phase one, he said, will comprise a rise of 500,000 bpd after the removal of sanctions. Phase two will be increasing the output to 4.2 million bpd that existed before the sanctions were implemented against Iran. And Phase three will involve increasing Iran’s production by a further 2 million bpd to reach above 6 million bpd.