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Iran's Zanganeh supports emergency OPEC meet, doubts it will happen

Tehran — * Iran determined to hike oil output by 1 mil b/d by end-March
* Crude output increase will happen in two phases

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Iranian oil minister Bijan Zanganeh said on Sunday he supported the idea of an emergency OPEC meeting to discuss how the oil producer group might respond to the latest oil price rout that on Friday saw US light crude trade below $40/barrel for the first time in six years.

However, he added, such a meeting was unlikely to take place because of what he called the "political objectives" of some member countries. He did not elaborate.


"If such a meeting is held, it will be effective," Zanganeh said, quoted by oil ministry news service Shana.

"It will be good if this meeting is held. [But] it's unlikely that some countries that have political objectives ... to cut prices would easily agree with such a move," he added.

"The political atmosphere within OPEC, especially in the Persian Gulf coastal countries, is not calm and there is no appropriate atmosphere to carry out talks in OPEC," he said.

An extraordinary meeting of OPEC, whose next conference is scheduled to take place in early December, would require the backing of kingpin producer Saudi Arabia.

There has been no indication that Riyadh, which argued last November that cutting oil output would not halt the oil price fall but would further reduce OPEC's share of world markets, may be willing to back an emergency meeting.

Official data show Saudi crude production averaging 10.56 million b/d of crude in June, nearly 1 million b/d more than in November and a record.

However, the kingdom told OPEC earlier this month that it reduced production by 200,000 b/d in July.

OPEC's 12 members collectively pumped 31.4 million b/d in July, exceeding its official ceiling by 1.4 million b/d, according to the latest Platts survey.

SLUMP

Zanganeh attributed the latest slump in oil prices to developments in the global economy in general and China in particular.

"Before, it was oversupply because of shale oil and gas production which would have gas condensates alongside. But at the moment there is low demand in a country like China," he said.

But he also said that OPEC -- "especially those [producers] which produced big amounts of oil in the past years and have earned big amounts of income from it" -- should play a role in managing output.

Zanganeh was asked whether, given the current oil price environment, it was reasonable for Iran to be planning to increase its crude production.

"We will increase our oil [output] at any cost and we have no other way. This is not [just] the oil ministry's policy, it's the government's," he said.

"If we don't increase our production at the right time, we will lose our share in the market forever."

Indeed, Zanganeh said, Iran is determined to increase its crude production by 1 million b/d before the end of March next year.

"We will have [the] increase [in] oil production in two phases, if the financial resources are provided," he said, quoted by Shana. Existing resources are "little," he said.

"Based on the outlined programs, in the first phase, which will fall in [the Iranian month of] Aban, 500,000 barrels [per day] will be added and in the second phase, which will be operational by the end of the [current Iranian] year, another 500,000 barrels will be added," Zanganeh said.

The Iranian month of Aban starts October 23 and the Iranian year ends March 19, 2016.

Iran hopes to see international sanctions lifted in the next few months if the historic nuclear agreement reached with six world powers in mid-July is finalized later this year.

Sanctions have reduced Iran's crude exports to around 1 million b/d from previous levels of 2.2 million-2.3 million b/d.

Zanganeh has said that Iran will be able to boost exports by 1 million b/d within six months of the removal of sanctions.

--Aresu Eqbali, newsdesk@platts.com
--Edited by Margaret McQuaile, margaret.mcquaile@platts.com; Geetha Narayanasamy, geetha.narayanasamy@platts.com