Floating storage in Iran down nearly 50% in the last three months – up to 30 cargoes

Iran is using the recent uptick in oil prices to sell off crude oil that has been sitting in offshore storage since the end of international sanctions. The Islamic Republic sold more than 13 million barrels of oil that was held in tankers, capitalizing on OPEC’s agreement to cut production in November, reports Reuters.

The amount of Iranian oil held at sea has dropped to 16.4 MMBO from 29.6 MMBO since the beginning of October. Prior to that, Iran’s offshore inventories sat relatively untouched, with just 0.1 MMBO sold in the first three quarters of the year.

The spike in sales from offshore storage has also lightened the load on Iran’s tanker fleet, with 12 to 14 Iranian tankers now holding crude. During the summer, around 30 tankers were tied up holding crude out of the 60-vessel fleet.

The oil sold in recent months has gone to buyers in Asia including China, India and South Korea and to European countries including Italy and France, although it is not clear which companies are buying the crude, reports Reuters.

Holding crude oil in offshore storage is very expensive according Mehdi Varzi, a former official at the National Iranian Oil Company (NIOC) who is now an independent global industry consultant. The country lacks enough land storage facilities for its oil and must hold oil offshore in order to keep up production while it looks for buyers.

“Iran got its way at OPEC and the Saudis agreed not to limit their capabilities. Iran will go ahead and look to export whatever they can for winter demand (globally),” said Varzi. “This is a commercial policy of trying to get rid of a lot of their crude oil on tankers as holding oil on tankers is very expensive.”

Iran qualifies 29 international companies to work on Iranian oil and gas projects

Since the end of international sanctions, Iran has steadily increased as the country looks to gain lost market share. Iran was able to increase production by approximately 0.8 MMBOPD over the course of 2016, according to the most recent data from OPEC, but in order to increase production further, the country will need the assistance of international oil companies (IOCs).

On Tuesday, Iran announced a list of 29 oil companies it approved to bid in tenders for future development projects. The list includes majors from China, Russia, France, Germany, and other countries. A full list can be seen here.

NIOC will hold its first tender in late January to seek partners for a project to develop the South Azadegan oil field. Shell and Malaysia’s Petroliam Nasional both signed preliminary agreements last month to conduct development studies at Azadegan and other oil fields.

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