Iran’s push for big investment in its oil industry comes amid crude prices sliding to new record lows but officials are confident the low cost of production in the country will supersede any drawback.
The collapse of oil prices has driven many US shale and other high-cost producers out of business and forced companies to put their development plans on hold.
Nevertheless, it is business as usual in Iran where production costs in some central oil fields wallow at $1-$1.5 a barrel.
“Currently, the cheapest crude oil in terms of recovery costs is produced and supplied in Iran’s central regions where production is possible at $1-$1.5 a barrel,” CEO of Iranian Central Oil Fields Company Salbali Karimi said.
The country’s oil reserves, the world’s fourth largest estimated about 150 billion barrels, are mainly based in the Zagros belt and the Persian Gulf.
With crude prices on a tailspin, officials have taken new measures since last year to cut costs further and make production more efficient, Karimi said.
“With the implementation of the existing plans, we expect oil and gas production costs to reach a minimum,” he said.
Each barrel of conventional crude oil in the Persian Gulf costs Iran between five and 10 dollars to recover versus $40-$80 for the shale oil.
Iran is “the world’s cheapest country” for oil production, head of investment at the National Iranian Oil Company (NIOC) Ali Kardor said in October.
“The finished cost of each oil barrel produced in Iran is about $5. This price tag doesn’t exceed $10 with the costliest of processes,” he said.
Iran needs $250 billion of investment in its oil industry between 2016 and 2025, including $176 billion in its upstream sector and another $77 billion in downstream spending, Kardor said then.
The country plans to boost oil production to 5.7 million barrels a day and gas output to 1.4 billion cubic meters a day by 2021.
Last month, Iran hosted leading energy companies from around the world at a conference in Tehran to unveil its new framework for oil and gas contracts and present $30 billion worth of projects to investors.
As many as 250 representatives of companies from 33 countries attended the event.