RPT -- Interview: Iran nuclear deal not to impact U.S. tight oil industry much

Iran will increase oil export after the newly-reached nuclear deal as it may gradually help lift sanctions against the country, but it will not have great impact on the U.S. tight oil industry in the near future, said a senior researcher of a think-tank based in Washington D.C.

"If the U.S. tight oil industry experiences increasing economic difficulty in 2015, it won't likely be the direct result of a deal with Iran," said Deborah Gordon, director of energy and climate program with Carnegie Endowment for International Peace, in a recent interview with Xinhua. "As for the prospects for the industry in 2016, it probably has more to do with the likelihood of whether the global economy recovers or not."

The United States has witnessed a tight oil boom in the past few years driven by the widespread usage of hydraulic fracturing and the higher crude oil prices hanging around 100 U.S. dollars per barrel

As international oil prices fell sharply last year due to oversupply, however, the momentum of the U.S. tight oil industry has slowed down significantly by production, investment and employment.

Gordon said it is "impossible" to predict whether the deal will worsen the global oil oversupply at present as "lifting sanctions will likely be a non-linear process just as the nuclear negotiations have been. No one can predict the exact path, end point, and timing."

The nuclear accord, reached last week between Iran and the P5+1 -- Britain, China, France, Russia and the United States plus Germany -- to put Iran on the path of more strict limits on its nuclear program in return for sanctions relief, will take time to work through U.S. and Iranian decision making bodies, she said. " There is no floodgate that will automatically open so Iran's oil rushes into the market."

The United States and the European Union (EU) imposed sanctions against Iran at the end of 2011 and during the summer of 2012, respectively, cutting the Middle East country's oil export by almost 50 percent, from averaged 2.6 million barrels per day in 2011 before the sanctions to averaged 1.4 million barrels per day last year.

Iran has expected it can boost oil exports soon after the sanctions are removed as the country can build up its oil production capacity quickly. Iran's Oil Minister Bijan Zangeneh said Iran can produce nearly 4.7 million barrels a day in the near future when he met with the members of a German business delegation in Tehran Monday this week, 42 percent higher than its production in March this year.

But Gordon felt doubtful about it as she believed the country lack technical ability and financial resources to recovery its production sharply in a short run after almost five year of sanctions.

"Iran's oil fields tend to be mature, stock heavier oil, and in advanced stages of decline, requiring sophisticated enhanced- recovery methods," Gordon said. "Foreign technology, capital and oil field services have not been provided over the past five years due to sanctions. And when sanctions are finally lifted, low oil prices may not support major new investments."

Gordon also believed the deal will not make foreign investments rush into Iran's oil industry, neither will it make the financial situation of the U.S. tight oil industry deteriorate further.

"There are real risks that international oil companies (IOCs) will have to weigh. Oil is currently oversupplied and prices are low. Arab OPEC nations supply similar quality crudes to the same markets," said Gordon, adding "Iran may have to offer significant discounts to attract IOCs." Enditem