The news that sanctions are set to be eased on Iran following talks in Geneva is likely to have a significant effect on the tank storage industry in the region. Iran holds the world’s fourth-largest oil reserves, but its exports and oil industry have been hurt by the tough UN sanctions against it in response to its development of uranium. Though Iran will not be allowed to increase its oil sales for six months, the deal has eased tensions and Iran’s Press TV reported on Sunday that they will build storage facilities for millions of barrels of additional oil storage in the Gulf over the next few months.
“By the middle of the next (Persian calendar) year (beginning March 20, 2013), nearly 8.1 million barrels will be added to the crude oil storage capacity of Iran,” Press TV reported the managing director of the Iranian Offshore Oil Company (IOOC), Mahmoud Zirakchian-Zadeh, as saying.
Iran has over 20 million barrels of onshore oil storage capacity at Kharg Island and another 5 million at Lavan Island but these facilities are according to Reuters believed to have been filled as Iran’s exports have slid during sanctions over the past year. The additional storage to be built over the next year near the Bahregan oil field in the northern Gulf would be enough to store less than three days of the International Energy Association’s estimate of Iranian output of around 2.7 million bpd in October.
Following the announcement of the easing of sanctions, Bijan Namdar Zanganeh, the veteran oil minister who has returned to government after an eight-year absence, told the Financial Times he had held meetings with European companies and “indirectly” with US firms with a view to inviting them back to Iran.
Some oil majors appear to be open to an Iranian approach. When asked last month if Total would return to Iran if sanctions were lifted, Christophe de Margerie, chief executive of the French energy group, replied: “Of course.” Whilst Peter Voser, Shell’s outgoing chief executive, told an industry conference last month that Iran had “vast resources” of oil and gas and “in the longer term, [its] hydrocarbons will have to be developed to meet [rising world] demand”.
With a still volatile political situation (the Geneva talks proved unpopular with some hardliners in Tehran) and the oil sanctions set to be the last to be eased the floodgates of Iranian crude may not open immediately but market forces, growing demand as well as an opportunity to help the beleaguered Iranian economy make the growth of tank storage in Iran perhaps irresistible.