SearchMajor Iranian oil company says oil at $60 a barrel could stabilize the energy market

Major Iranian oil company says oil at $60 a barrel could stabilize the energy market ... 27/09/2017 Economy

Keywords:#Asia, #Brent, #CNBC, #Capital,, #Fatemeh, #Getty, #Getty_Images, #International_Energy_Agency, #Iran, #Iranian, #Kharg, #Kharg_Island, #Middle_East, #National_Iranian_Oil_Company, #OPEC

Oil prices near $60 a barrel could stabilize the energy market, a senior executive at a major Iranian state-owned oil company said
Saeid Khoshrou, director of international affairs at the National Iranian Oil Company, said low prices gave investors the wrong impression
Khoshrou said the ratio between Iran's reserves and production capacity indicate it is a great investment destination
Saheli Roy Choudhury | @sahelirc
Oil prices near $60 a barrel could stabilize the energy market and signal for investors to invest and develop petroleum fields, according to a senior executive at a major Iranian state-owned oil company.
Saeid Khoshrou, director of international affairs at the National Iranian Oil Company, told CNBC on Tuesday that low, fluctuating prices in the oil market gave investors the wrong impression.
When oil prices hover near $60, "a lot of investors maybe can invest on developing petroleum fields, but when it's $45 or $40, it's a different story," Khoshrou told CNBC's "Capital Connection."
Brent was trading around $59 a barrel on Tuesday afternoon in Asia trade, while U.S. light crude was around $52.
"I think something around $60 would stabilize the market," he said, adding the price point is "good enough to attract investors to the field, especially in the Middle East, where there are a lot of low cost fields that can easily ... be developed, feed the market (and) meet the requirement in the market."
Iran's energy exports suffered previously under international sanctions imposed amid concerns that it was developing nuclear weapons. Those sanctions were lifted earlier this year, allowing the OPEC producer to export oil to the international energy market.
The lifting of the sanctions, along with Iran's low cost of production and untapped energy reserves, make the country a potentially attractive investment destination. But some experts suggest that many major firms are not ready to commit to Iran deals.
Currently, on average, Iran's cost of production is around $10 per barrel, according to Khoshrou, and he pointed to the ratio between Iran's oil reserves and production capacity as an indication of why the country is a good prospect for oil investors.
Fatemeh Bahrami | Anadolu Agency | Getty Images A general view of the Port of Kharg Island Oil Terminal in Iran on March 12, 2017.

* * * OPEC data showed that in 2016, Iran's proven crude oil reserves were about 157.2 billion barrels, while its production capacity was about 3.65 million barrels a day.
Proven reserves indicate an estimated quantity of all hydrocarbons — crude oil or natural gas — which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing conditions, according to OPEC.
"If you take a look at the reserve and the production ... this ratio itself gives the signal (that) it is a good place to put money and invest on it."
But investment potential in Iran could be a moot point if oil prices falter again next year, despite the OPEC production cuts that are currently in place.
"For next year, we see very strong growth in non-OPEC supply," Peg Mackey, chief OPEC oil analyst at the International Energy Agency (IEA), told CNBC's "Squawk Box."
Mackey said the IEA expects a growth of 1.5 million barrels a day in 2018 from non-OPEC producers compared with demand growth of 1.4 million barrels a day.
"We see slightly higher non-OPEC growth versus demand growth. In that situation, it's hard to imagine a dramatic decline in inventories next year," she said.
Khoshrou added that currently Iran is producing around 3.8 million barrels per day, in line with the country's OPEC production quota, against a capacity of around 4 million barrels a day.
Saheli Roy ChoudhuryReporter,
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