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Iran signs 8 more oil projects as part of plan to boost output by 355,000 b/d

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Iran signs 8 more oil projects as part of plan to boost output by 355,000 b/d

Highlights

Iran pumped avg 2.03 million b/d in 2020: S&P Global Platts

Latest new projects set to add 95,000 b/d

Plan to boost oil output started in January 2019

Tehran — The National Iranian Oil Co. on Jan. 11 signed eight more oil projects as part of a $6.2 billion national program started in January 2019 to boost oil production by 355,000 b/d at 33 fields.

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Eight projects worth $1.2 billion were signed on Jan. 11, potentially boosting oil production by 95,000 b/d. The first group of these oil production enhancement projects signed in January 2019 are about 30% completed, and some of the fields have started production, NIOC managing director Masoud Karbasian said at the ceremony.

"The contractors will not be paid if they don't increase the production," oil minister Bijan Zanganeh said. The country's top oil official has been leading efforts to increase oil recovery and enhancement in preparation for US sanctions being modified, or lifted, after Joe Biden takes office as US president.

December production

Iran pumped 2.04 million b/d of crude oil in December, according to the latest S&P Global Platts survey of OPEC production. That is little changed from an average of 2.03 million b/d in 2020 and down from 2.4 million b/d in 2019 and about 3.83 million b/d in mid-2018, when US President Donald Trump announced he was withdrawing the US from the nuclear deal and reimposing sanctions on Iran's oil sector.

Zanganeh said at the Jan. 11 signing that it's the first time the oil projects are being financed by the capital markets, in this case bonds, as opposed to the National Development Fund or usual state resources. NIOC's Karbasian said 30,000 billion rials of bonds have been sold to finance the new projects with plans to issue 20,000 billion rials more.

In total, 22 engineering, procurement and construction companies have signed contracts for the 33 projects -- with two projects not yet signed -- to drill 253 new wells and repair 130 others. There will be 55 rigs used in the 33 projects, both onshore and offshore. The local content will be 80%. Some 17 exploration and production companies and 16 drilling companies are working with the 22 EPC signing firms.

Contracts signed for the first group of projects in January 2019 were worth $800 million, to increase oil production by 75,000 b/d. A second group including 13 fields was awarded in August 2020 to Iranian companies with a total investment at $1.7 billion, to raise oil output by 185,000 b/d.