Iran will dedicate about $21 billion in capital expenditure (capex) on oil projects over the next four years, according to leading market research and analysis firm GlobalData.
The spending is aimed at ensuring that production grows to around 4.9 million barrel per day (bpd) in 2021, the UK-based company said in its latest analysis of the country’s energy plans.
“Iran is expected to spend $13.1 billion as capex (capital expenditure) on conventional oil and $7.9 billion on heavy oil projects during 2018 to 2021, with spending topping in 2019 at $5.7 billion,” it said.
Iran is one of the cheapest countries in terms of oil and gas production. According to GlobalData, average full cycle capex per barrel of oil equivalent for Iran’s oil projects is $3.6.
Onshore projects have an average full cycle capex of $3.0 per barrel of oil equivalent, while shallow water projects have an average of $5.3 per barrel of oil equivalent in full cycle capex, it said.
“Average development break-even price for oil projects in Iran is about $27.6 per barrel. Shallow water projects require an oil price of $35.4 per barrel to break even, while the onshore projects have a development break-even oil price of $25.5 per barrel.”
By 2021, Iran will have 66 fields producing liquid hydrocarbons, of which 38 and nine are conventional and heavy oil fields, while 19 are gas fields producing condensate, the report said.
Iranian officials say the country needs $200 billion of investments for upstream and downstream projects by 2021.
The government expected a 2015 nuclear agreement with the West and other countries would open the floodgates of foreign investment to the country but concrete dedications have been modest so far.
The biggest contract since the lifting of sanctions in 2016 has been with France’s Total to develop part of the massive South Pars gas field at a cost of $4.8 billion.
The country signed three oil deals during the Iranian year which ended last month.
On Monday, Russia’s presidential aide Yuri Ushakov said his country expected to invest more than $50 billion in Iran’s oil and gas sector.
“Energy is the most promising sphere for cooperation between Russia and Iran. Leading Russian oil and gas companies such as Gazprom, Gazprom Neft, Rosneft, Lukoil, Zarubezhneft and Tatneft are systemically working on development of fields in Iran. The expected amount of investments is over $50 billion,” he said in Moscow.
Russia and Iran signed six provisional agreements to collaborate on “strategic” energy deals worth up to $30 billion when President Vladimir Putin visited Tehran last November.