Sanctions on the country are continuing to bite, resulting in a fall in oil export volumes and revenues. Gas export schemes and refinery expansion projects will make little progress as international oil company (IOC) partners heed the investment embargo, meaning the overall outlook will continue to deteriorate unless there is a breakthrough in the nuclear stalemate. 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 declining in 2012-13 owing to the effects of international sanctions on exports, although the ‘end game’ between Iran and the West is unpredictable at this stage. Liquids output is put at 3.37mn barrels per day (b/d) in 2012 and 3.35mn b/d in 2013. Assuming a successful resolution of the situation and the lifting of sanctions, we now forecast liquids output recovering to 3.74mn b/d by 2016 and to 3.90mn b/d by 2021. 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 2.30mn b/d in 2011 to a low of 1.47mn b/d in 2013.

US economic sanctions against Iran have slashed the volume of crude exported and oil revenues, the US Treasury said in mid-September 2012 as it vowed 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 to about 1mn b/d, the US Treasury said. 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. Net gas exports now look set to remain at a very modest level until Iran resolves its issues with the Western world.
China National Petroleum Corporation (CNPC), parent company of PetroChina, has quit Iran”s South Pars project. According to Iran”s Oil Ministry, CNPC employees have left the city of Assolouyeh, which is close to the offshore field. The ministry also stated that the Chinese company had delayed work on developing Phase 11 for more than 1,130 days.

On May 10 2012, Iran”s state news agency announced the discovery of 8-10bn barrels (bbl) of oil in an unnamed oilfield located within the Iranian sector of the Caspian Sea. After the ”huge light crude oil” discovery reported by Mehr in April 2012, this is the second reportedly substantial find to have been made in 2012. The Caspian oil discovery suggests that the total volume of
Iran Oil & Gas Report Q412 © Business Monitor International Ltd Page 8 resources found since 2009 – according to Iranian news sources – could easily exceed 53.06bn bbl of liquids and 3,500bn cubic metres (bcm) of gas.

Based on an assumed 2012 average OPEC basket oil price of US$107.05/bbl, we are forecasting oil revenues for the year of US$59.10bn, and total hydrocarbons revenues of US$60.70bn. By 2016, assuming an average US$93.25/bbl, total revenues should be US$60.94bn, easing to US$57.11bn by 2021 (assuming an oil price of US$91.50/bbl).

Iran Oil and Gas Industry 2012

Published: October 2012                    No. of Pages: 95                          Price: US $ 1175

Table of Contents

BMI Industry View … 7
SWOT Analysis 9
Iran Oil and Gas SWOT 9
Global Energy Market Outlook .. 10
Oil: Getting Closer To Emerging Markets Inflection Point 10
Regional Energy Market Outlook .. 18
Iran Energy Market Overview 26
Industry Forecast Scenario … 30
Oil And Gas Reserves .. 32
Oil Supply And Demand … 33
Gas Supply And Demand . 35
LNG . 36
Refining And Oil Products Trade . 37
Revenues/Import Costs. 38
Key Risks To BMI’s Forecast Scenario 38
Oil And Gas Infrastructure 39
Oil Refineries … 39
Service Stations 41
Oil Storage Facilities … 41
Oil Terminals/Ports . 42
Oil Pipelines 42
LNG Terminals 43
Gas Pipelines … 43
Gas Storage . 48
Regional and Country Risk/Reward Ratings … 49
Iran Upstream Rating – Overview .. 52
Iran Upstream Rating – Rewards … 52
Iran Upstream Rating – Risks . 52
Iran Downstream Rating – Overview .. 52
Competitive Landscape 53
Executive Summary .. 53
Overview/State Role . 54
Licensing And Regulation … 54
Government Policy . 54
Refined Fuels Policy … 55
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International Energy Relations … 56
United Nations 56
United States … 57
Canada … 58
China .. 58
East and South East Asia 58
Russia . 59
India … 59
Venezuela 60
Iraq And The Gulf States. 60
European Union.. 61
Turkey . 62
Kuwait 63
Company Monitor .. 64
National Iranian Oil Company (NIOC) … 64
National Iranian Oil Refining and Distribution Company (NIORDC) .. 67
Eni … 70
Total Iran . 72
Shell Development Iran 74
China National Petroleum Corporation (CNPC) . 76
ONGC Videsh (OVL) … 78
Statoil – Summary … 80
CNOOC – Summary 80
OMV – Summary. 80
BP – Summary 80
Sinopec – Summary . 80
Gazprom – Summary .. 81
Middle East – Regional Appendix . 82
Oil And Gas Risk/Reward Ratings Methodology 89
Ratings Overview . 89
Indicators . 90
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BMI Methodology .. 93
How We Generate Our Industry Forecasts .. 93
Energy Industry … 93
Cross checks 94