Bloomberg News

Iran’s Oil Minister Doubts EU Will Stop Buying Iranian Crude

December 07, 2011

(Updates with current oil production in 11th paragraph.)

Dec. 5 (Bloomberg) -- Iran’s oil minister said he doesn’t expect the European Union, which last week expanded sanctions on the Persian state, to stop buying crude from his country.

There are “some doubts the decision will be taken,” Rostam Qasemi said in Doha, Qatar. “They are very wise.” There are uncertainties about European demand because of the sovereign debt crisis that is affecting the continent, he said.

Following up on penalties imposed by the U.S. last month, the EU added 180 Iranian officials and companies to a blacklist on Dec. 1 to try to pressure the world’s third-largest crude exporter to curtail its nuclear program. The EU is still discussing a possible halt to purchases of Iranian crude. The Gulf nation denies it seeks technology to build nuclear weapons.

“The risk of disruptions to oil supplies remains high, after European foreign ministers agreed on Dec. 1 to tighten sanctions against Iran and consider an embargo on Iranian oil imports,” Christophe Barret, a London-based analyst at Credit Agricole SA, said in a report. “This would introduce severe disruption to refining in several EU countries,” it said.

Iran said crude will surge past $250 a barrel if nations threaten to ban its purchases, Shargh newspaper said yesterday, citing Ramin Mehmanparast, a spokesman for the Foreign Ministry.

‘Strong Gap’

Oil rose for a second day in New York on concern that tension in the Middle East, particularly on Iran, threatens supplies. West Texas Intermediate crude gained as much as 1 percent, after posting the first weekly increase in three. Futures were at $101.81 a barrel in electronic trading on the New York Mercantile Exchange as of 1:43 p.m. London time.

Qasemi said prices of more than $100 a barrel are “fair.” Global markets are in balance and there won’t be a “strong gap” between supply and demand next year, he said.

Oil is Iran’s main source of income, supplying more than 50 percent of the national budget, according to International Monetary Fund figures. Iran is the second-largest oil supplier in the Organization of Petroleum Exporting Countries, earning $56 billion in the first seven months of this year, according to U.S. Energy Department estimates. Iran pumped 3.6 million barrels a day last month, a Bloomberg survey showed.

Qasemi didn’t comment on OPEC’s output quotas, saying the issue will be left for discussions at the next meeting of the organization, which will be on Dec. 14 in Vienna.

Raise Production

National Iranian Oil Co. will invest $178 billion from 2011 to 2015 to increase oil and natural gas production, Managing Director Ahmad Qalebani said. The state company will earmark $79.3 billion of that to developing current and new oil fields by 2015 to raise crude production that year to 5.1 million barrels a day, he said in a presentation in the Qatari capital.

NIOC’s current production capacity is more than 4 million barrels a day and it is pumping about 3.5 million, he said. The company aims to raise capacity by 2015 to 5.42 million barrels, Qalebani said. The rest of the funds will be spent to roughly double natural gas production over the period, he said.

Iran pumped 5 percent of the world’s oil last year, BP Plc’s Statistical Review of World Energy showed. The EU bought 450,000 barrels a day of Iranian oil from January to June, according to the Energy Department. The country supplied half of the imports to Turkey, 11 percent to China and India and 10 percent to Japan, the department said.

--With assistance from Nayla Razzouk in Dubai. Editors: Raj Rajendran, Rob Verdonck.

To contact the reporters on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net; Anthony DiPaola in Doha at adipaola@bloomberg.net; or Wael Mahdi in Doha at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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