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Last weeks OPEC meeting was characterized by a certain banality. The news that OPEC and non-OPEC members would agree to another nine months of production cuts elicited a collective shrug from oil markets and brought about a fall in prices. Little that occurred gave rise to alarm, and apart from news that U.S. shale producers were in dialogue with OPEC officials and that Saudi Arabia and Russia were conniving on deeper cuts in the backroom, reporters were somewhat at a loss for what would make for a juicy story.

Amidst the routine nature of the meeting, however, was a somewhat surprising announcement from Iran, OPECs third-largest producer, that it would not be cutting any output but would instead maintain its current level of 3.8 million bpd. Irans oil minister, Bijan Zanganeh, dodgedinitial questions regarding Irans compliance with OPECs agreement, but on May 25 stated categorically that Iran will not reduce its output.

There are indications that the country may be planning to ramp up production in order to fuel higher exports. In an interviewwith Argus Media, Zanganeh did not refute a claim from the National Iranian Oil Company (NIOC) that Iranian production would increase by 300,000 bpd by March 2018, though he did state Iran would respect the decision by OPEC.

He went on to state that by 2021 Iran would add 700,000 bpd to its overall capacity, with a targeted total capacity of 4.7 million bpd. He was hopeful that condensate production would increase from 600,000 bpd to 1 million bpd by March. The OPEC agreement was a short-term decision, and Iran was looking at the medium to long-term.

A major factor in Irans plans for increased output are contracts with foreign companies. The government of Hassan Rouhani has attempted to revamp Irans strict regulations for doing business with foreign companies. This process was stalled for months amidst resistance from Irans hard-liners, but Rouhanis re-election in May has spurred hopes that the countrys aging oil and gas infrastructure will soon enjoy major injections of foreign capital.

A deal with French oil giant Total is nearing completion, according to Zanganeh, which would see a more rapid development of the South Pars natural gas field, shared between Qatar and Iran. Total is musingan investment of $2.2 billion. Related:Saudis, Russia Will Do Whatever It Takes To Bring Oil To Balance

One Iranian official stated that deals worth $50 billion would be concluded in 2018, while Zanganeh mentioned forthcoming agreements with Lukoil, Maersk, Petronas and Petramina, though details of the deals are hard to come by.

A deal with China National Petroleum Corp (CNPC) will be concluded in July, according to Zanganeh, and will focus on the development of Irans Azadegan deposit.

In Vienna, the Iranian oil minister talked up Irans desire to reconnect with the world. Rouhanis re-election was a sign that Iran was ready and willing to engage with the international community, despite renewed hostility from the United States and considerable suspicions from the Gulf States regarding Irans regional ambitions.

Yet apart from the hype stirred up by Irans oil administration, little concrete information regarding Irans new oil and gas deals has emerged. The much-anticipated flood of investment has yet to materialize. Rouhanis first election, and the deal signed in July 2015 over the countrys nuclear program, was meant to auger an end to Irans isolation. Rouhani was able to win re-election in May despite considerable disappointment over Irans stagnant economy, which he had vowed to reinvigorate in part through deals with foreign companies.

While it is certain that Rouhani will be more amenable to new oil deals than his challenger, hardliner Ebrahim Raisi, whether he is able to translate his electoral win into new investment for Irans oil and gas industry remains to be seen.

Zanganehs comments in Vienna mirror the declarations made by an NIOC official after the July 2015 agreement and contain much of the same sentiment: confidence, optimism that Irans dreams for higher production and exports will be realized, and a certain amount of hype. Thats nothing new for OPECs third-largest oil producer, which has vowed that it will respect the OPEC production deal even as it plans for the future; whether the money needed to realize that future appears is another question entirely.

By Gregory Brew for Oilprice.com

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Should Markets Fear Iran's Plans To Boost Oil Output? - OilPrice.com