28 Mar 2024
Friday 2 December 2016 - 12:17
Story Code : 241200

Zangeneh hails OPEC's "Major" decision for output cut

Shana -- Minister of Petroleum Bijan Zanganeh said on Thursday that per OPEC 's "major" decision Iran will be exempted from its output cut plan, which is pegged at 32.5 million barrels per day.

"The decision was an important decision. OPEC was passive in the market for more than two years.

Certain groups said OPEC is dead for good. Signs of OPEC livelihood were observed in Algiers and we decided to bring the OPEC production to the level of 32.5 million barrels per day. In fact, the decision of the 171st meeting of the OPEC was exactly that and the share of any country in the production cut was decided in the session," Zangeneh told TV just after his Vienna visit to take part in the 171st OPEC session.

He said on OPEC decision, members of the organization will cut their production by 1.2 million barrels per day, thus bringing the Organization's production to the level of 32.5 million barrels per day.

The minister said, "OPEC showed that despite competition and even harsh political differences, there is cooperation and engagement within its body. I think, through cooperation of the non-OPEC members, the oil price will stand well above 50 dollars a barrel."

He went on announcing, "All countries will have to cut their latest production, which is based on the October level, by 4.5 percent. Iran is an exception. After months of debate, exchange of visits, lengthy and nervous discussions, the reference level for Iran's crude oil production was decided to be that in 2005, the highest figure in Iran's production history.

Per report of the secondary sources, Iran will produce 3.975 million barrels per day and on this basis, as reports indicate, it was agreed that in the next six months, which is the period the decision will be in force, Iran should increase its production by 90,000 barrels per day on the average from the figure in October."

To a question how other members, especially Saudi Arabia, accepted the accord, Zangeneh said, "Well, the very important point we should pay attention to in our and government life is cooperate and engagement, while competing and having harsh political differences. The good testimony to the claim is OPEC at present: While being in rivalry, and at times suffering harsh political differences, the members managed to have engagement. The engagement should be sought partially in power of the country.

Your power in production, power of any country for production and oversupply capacity have the first and final say in the OPEC. You will have the first say if you are powerful; however, if you are weak, nobody will heed you on your begging and demand. In this connection, we resisted and insisted on our stand not only in Ministry of Petroleum but in the country. We emphasized that Iran's condition in production should return to the pre-sanction level; of course, many started criticizing us, reasoning that the gesture will push down oil prices . However, eventually upon our resistance, and gained the result thanks to God Almighty. For us, national interests were important."

The TV anchor then turned to the minister and asked about the impact of the OPEC decision on oil prices and said since last night, crude oil price had increased more than five dollars a barrel.

Zanganeh replied, "December is a bad month for the market; not everybody busy oil and demand diminishes.

They lower the storage level in their inventories in a bid to show their yearend profits. However, eventually came the cooperation of Russia; let's not forget the important point that after phone conversation of the President of the Islamic Republic of Iran, Dr. Hassan Rouhani, and President of the Russian Federation, Vladimir Putin, the country very clearly changed its stances in favor of production cut, while already it spoke in favor of oil freeze plan.

They admitted to reduce their production by 300,000 barrels per day and adding the 300,000 barrels per day to 300,000 barrels per day that is to be cut by other non-OPEC states, I think the oil price will go well above 50 dollars a barrel."

Asked about maximum production capacity of Iran, the minister said, "That's a reality that we are producing about 3.8 million barrels and close to 3.9 million barrels per day; of course, what the secondary sources refer to are the criteria for the OPEC. They put Iran's production in October at 3.707 million barrels per day; actual production of all countries is different with the amount the secondary sources cite. At any rate, we should raise our oil production capacity."
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