Iran nuclear talks to continue tomorrow
Unable to meet a self-imposed 31 March deadline, the P5+1 negotiating partners — the US, UK, France, Russia, China and Germany — and Iran agreed to continue their talks into tomorrow. Their goal is to first craft a political deal that will serve as a framework for finalizing a comprehensive accord by 30 June.
"We have made enough progress in the last days to merit staying until Wednesday," the US State Department said. "There are several difficult issues still remaining."?
President Barack Obama was expected to speak with negotiators today.
Deputy head of Iran's Atomic Energy Organization Behruz Kamalvandi said today the talks slowly are making headway, Iran's state-run news agency Irna quoted him as saying.
If the talks are successful, Iran would be able to expand its oil exports beyond its current limits of about 1.1mn b/d — not including condensate — and achieve a breakthrough in relations with the US and Europe. Opec's third largest oil producer, Iran's oil output was 2.9mn b/d, up from 2.85mn b/d in January.
Iran has been pushing for immediate sanctions relief, but the US administration has insisted any deal will phase-in sanctions relief over time.
US lawmakers have threatened to impose new sanctions on Iran if negotiators cannot reach a political framework. The Senate Foreign Relations Committee is scheduled on 14 April to take up legislation that would enable Congress to review any deal before Obama could suspend or waive any congressionally-mandated sanctions. While Obama has threatened to veto any such legislation, proponents of new sanctions may be able to collect enough votes to override a presidential veto.
If the parties can reach an agreement, Obama is expected to suspend enforcement of provisions of the National Defense Authorization Act, which requires Iran's oil customers to reduce their oil purchases substantially. Sanctions experts are watching to see whether an agreement will immediately lift requirements that Iran's oil sales proceeds be held in escrow accounts.
Already oversupplied, markets may have to contend with as much as 1mn additional barrels of Iranian crude once sanctions ease.
Oil minister Bijan Namdar Zanganeh insists that Iran can swiftly lift exports by 1mn b/d after the US and the EU lift sanctions. Within two months of that point, Iran can restore production to 3.8mn b/d, Zanganeh told Argus in an interview last November. Sanctions cut Iranian oil exports in half to about 1mn-1.2mn b/d, while production amounted to 2.9mn b/d in February.
Iran is estimated to have as much as 30mn b/d in storage that it could market as it gradually ramps up production at idle fields. But those fields may not respond as quickly or as strongly as Iran hopes. Additionally, Iran needs to reintroduce the technical expertise of foreign oil firms in order to realize its output targets — a process that may take years.
If Iran and the P5+1 formulate a plan for lifting sanctions, Tehran will proceed with a new contract model to attract foreign investors to its underfunded oil and gas sector. Budget shortfalls have forced Iran to tap its national development fund in order to move forward with a number of projects. Tehran hopes to attract firms with enhanced oil recovery expertise to help stem declines at key fields in the country's southwest. IOC funds may also be required in order to complete new phases at South Pars, the supergiant non-associated gas field that Iran shares with Qatar.
Iran has repeatedly delayed the unveiling of its upstream contract model. When Tehran finally reveals the details of the new contract, it will also introduce the projects available to IOCs. Fields on offer will include some of Iran's largest onshore producers, including the 800,000 b/d Ahwaz, 500,000 b/d Marun, 500,000 b/d Gachsaran, 200,000 b/d Agha Jari and 130,000 b/d Bibi Hakimeh, Zanganeh told Argus in November.
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