"Iran Oil & Gas Report Q2 2013" is now available at Fast Market Research

Further sanctions and continued cutbacks by key Iranian customers reinforce the negative outlook for Iran's oil sector. With limited prospects for a positive resolution of sanctions in the near term, we highlight both the short- and possible long-term downside risks confronting the Iranian oil sector as international isolation continues. Indeed, gas export schemes and refinery expansion projects will make little progress as international oil company (IOC) partners heed the investment embargo. Meanwhile, Iran is claiming a succession of major oil and gas discoveries that, if proven, demonstrate considerable upside potential to its existing resource base.

We highlight the following trends and developments in Iran's oil and gas sector:

* BMI sees Iranian oil production continuing to decline in 2013. Indeed, January 2013 production fell to levels not seen in 30 years as a result of international sanctions focused on preventing the Islamic Republic from selling its oil exports abroad. We forecast a fall of more than 30% in oil production from 2011 to 2013. Production will remain depressed over the course of 2013, and then only pick up modestly over our forecast period. Production in 2017 is expected to be 3.10mn barrels per day (b/d), which is still well below the 4.23mn b/d produced in 2011.
* US economic sanctions against Iran have slashed the volume of crude exported and oil revenues, with the US Treasury vowing to keep up the pressure on Tehran to prevent the Iranian government from enriching uranium to make nuclear weapons. US efforts have paid off with Iranian crude exports falling substantially, including to the country's largest importers in Asia, namely China, India, Japan and South Korea. At the time of writing, there had been reports of imports of Iranian crude increasing, particularly from China and Japan, although they remain at depressed levels.
* Similarly, the outlook for sustained growth in gas exports has changed dramatically due to the impact of sanctions on foreign investment levels. For the foreseeable future, we see no progress in the development of liquefied natural gas (LNG) schemes, nor the gas field projects designed to supply the fuel. Gas production will continue to rise steadily, albeit modestly over the forecast period, at an average rate of 2% through to 2022.
* While fuel subsidy reforms have undermined the domestic oil consumption trend, we still expect the Iranian market to expand steadily, driving net crude oil exports down from 2.41mn b/d in 2011 to a low of 719,000b/d in 2013. A dramatically weakening rial on the back of sustained sanctions is putting significant pressure on the consumption of some refined products, however. For example, local Iranian airlines have increased fares significantly on the back of kerosene prices, which have risen by more than 80% in recent quarters.

Full Report Details at
- http://www.fastmr.com/prod/596843_iran_oil_gas_report_q2_2013.aspx?afid=301

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