Iran targets oil output capacity boost as nuclear deal talks make 'good progress'

Talks to revive the Iran nuclear deal and potentially ease oil sanctions are making "good progress," an Iranian foreign ministry official said Aug. 22, at a time when the country is taking steps to boost its crude oil production capacity.

"Generally, up to now, we have had relatively good progress. But the talks are a package of issues, over every single of them there should be an agreement," foreign ministry spokesman Nasser Kanaani told reporters in his weekly briefing Aug. 22. US President Joe Biden spoke with leaders of the UK, France and Germany about the negotiations over Iran's nuclear program, the White House said Aug. 21, without being any more specific.

Any deal that could help bolster tight global oil supplies isn't expected this year, according to Platts Analytics, a part of S&P Global Commodity Insights. Iranian oil production has held at 2.58 million b/d for the four months through July, according to the monthly Platts OPEC survey. In an Aug. 16 report, Platts Analytics said it had previously assumed an interim deal by the end of 2022, helping to boost Iranian oil supply by 500,000 b/d through the first quarter of 2023. It now assumes Iranian crude and condensate exports will stay flat at 800,000 b/d for the rest of 2022 and through the end of 2023.

Negotiations to revive the nuclear talks had broken down in March mostly over Tehran's demand that Washington delist the Islamic Revolutionary Guard Corps as a terrorist organization. Talks resumed in Doha, Qatar, in June. The US is unlikely to make any more notable concessions, at least until the November 2022 midterm elections, and in the meantime, will likely continue attempts to persuade Iran by sanctioning petrochemical and other trade, Platts Analytics says.

Iran's oil production capacity will be increased to 4.038 million b/d by the end of the current Iranian year in March 2023, or within seven months, oil ministry news service Shana reported Aug. 22, citing a National Iranian Oil Co. official. Iran's capacity is currently 3.8 million b/d.

Iran's oil industry has suffered from years of underinvestment. Any increase in capacity would require rigs, equipment for new drillings, repair and renovation of existing wells onshore and offshore fields as well as replacement of pipeline equipment, NIOC director for production supervision, Hormoz Ghalavand, said, according to Shana.

Some other facilities in need of overhaul or replacement include oil processing units, desalination, pressure boosting and turbo compressors, he said, adding that skid mounted equipment is also needed to reach the target.