The recent JCPOA agreement reached between Iran and the P5 +1, and approval of by the Iranian Parliament, is a big step forward in normalizing Iran’s relations with the international community. In anticipation of the removal of the economic sanctions, Iran has produced a list of fifty oil & gas projects worth an estimated $185 billion that it intends to develop. These projects will be presented at a post-sanctions summit in London planned for February 2016, and auctioned to secure much-needed foreign investment in Iran’s oil & gas sector. A number of IOCs, including BP, Shell and ENI, have expressed interest in re-entering the Iranian market.

Despite these positive developments, DW takes a conservative view with regards to Iranian hydrocarbons production. Total onshore production post-2015 is expected to rise steadily at a 2% CAGR through to 2021, with additional output coming predominantly from projects in the Khuzestan region, including the North & South Azadegan field developments. Several phases of the giant South Pars gas and condensate field development are expected to come onstream within the next few years, contributing to a significant rise in offshore hydrocarbons production to over 5 mboe/d in 2019. However, DW does not expect Iran to reach its 2016 target of raising total oil production to over 4 mb/d until 2018.

There is significant upside potential for this forecast, with projects such as the North Pars, Golshan and Ferdowsi field developments listed amongst those Iran plans to auction for foreign investment. However, Iran’s ability to secure the necessary investment is dependent upon its compliance with the terms of the JCPOA, some of which could take several months to implement. Smooth implementation of the JCPOA will also depend on a continued dialogue between Iran and International Atomic Energy Agency. It is therefore unlikely that Iran will be able to fulfill the commitments needed to lift the sanctions before the end of 2015 or early 2016. Uncertainty also remains surrounding the structure of the new Iranian Petroleum Contract, due to be introduced at the London summit. Therefore, despite the positive outlook for hydrocarbons production, limitations to growth in the short-to-medium term remain.