How Gas Imbalance Threatens Iran's Oil Production? / Risk of Losing Part of the Country's Oil Capacity

Concern over gas shortages in winter has grown with the drop in temperatures. However, far less attention is paid to the problems gas shortages cause for household networks, industries and power plants. Meanwhile, as the gas imbalance intensifies, part of the oil production capacity will be permanently lost. Post: How Gas Imbalance Threatens Iran's Oil Production? / Risk of Losing Part of the Country's Oil Capacity – First

According to Ambassador Arjan, the intensification of gas restrictions in Iran, in addition to limiting the activities of industries and increasing the pressure on the energy supply network, can have a hidden consequence for one of the most important sources of foreign currency income of the country. The reduction of gas available for injection into oil reservoirs, in a situation where Iran's oil production has also faced a significant drop under the influence of war conditions, increases the risk of a permanent reduction in production capacity.

The problem is that the drop in oil production is not necessarily compensated by the return of normal conditions, and in some oil fields, the continuation of gas injection restrictions can reduce the ability to harvest oil in the coming years.

According to the statistics provided by the International Energy Agency, Iran's oil production increased from 3.4 million barrels per day in January to 2.72 million barrels in July and 2.16 million barrels in August. In this way, Iran's daily oil production has decreased by 1.24 million barrels between January and August. This drop is not just a change in the monthly statistics, and if operational restrictions continue and infrastructural problems worsen, it can become a long-term problem for the country's oil industry.

Gas imbalance is a problem beyond domestic and industrial consumption

Gas imbalance is usually considered with consequences such as the limitation of industrial gas, the reduction of feedstock for petrochemicals and the increase in the use of liquid fuel and diesel fuel in power plants. In the meantime, the role of gas in maintaining oil production capacity is given less attention. In many oil fields, natural gas is not only a consumable product, but it is also important to maintain reservoir pressure and increase the oil recovery rate.

With the passage of time and continuous withdrawal from oil reservoirs, their natural pressure decreases. In such a situation, gas injection can help maintain reservoir pressure and move oil to production wells. If the injection does not continue according to the technical needs of the field, the production rate of the wells may drop and it may become more difficult to harvest part of the reserves.

Therefore, the lack of gas does not mean only the reduction of fuel available to consumers. If the supply limitation reduces the injection into the oil fields, a part of the gas that could have helped to maintain the oil production will inevitably have to be allocated to other uses. This choice may be necessary in the short term to manage consumption, but its cost can appear in the following years in the form of a drop in oil production.

The simultaneous drop in oil production and the restriction of gas injection

The importance of this issue increases when the reduction of oil production in war conditions is also considered. The drop in production from about 3.4 million barrels per day in January to about 2.16 million barrels in August shows that Iran's oil production and supply capacity has faced serious pressure during this period.

The main point is that if the drop in production due to war conditions is accompanied by a decrease in gas injection into the reservoirs, the oil industry is facing two different pressures. The first pressure is the reduction of production in the period of operational disruptions. The second pressure is the possibility of a further drop in production capacity in the future due to the decrease in reservoir pressure and the limitation of the possibility of extracting from oil reserves.

These two issues can aggravate each other. Restoring production after a stoppage or operational restriction depends on the condition of the wells, equipment and infrastructure. If during the same period, the pressure of the reservoir has also dropped due to the reduction of injection, the recovery of production may require more technical operations and higher investment.

How is part of the oil production capacity lost forever?

The reduction of gas injection does not mean the definite and immediate loss of oil reserves. The consequences of this event depend on the geological characteristics of each field, the amount of pressure drop, the period of injection restriction and the exploitation method. However, in reservoirs whose production is dependent on continuous injection and pressure maintenance, long-term reduction in injection can make harvesting conditions more unfavorable.

In such a situation, even if the gas supply improves in the future, the return of production to the previous level is not guaranteed. Reservoir pressure drop may be associated with higher costs to rehabilitate wells, implement pressure maintenance operations, or develop methods to increase recovery. In some situations, a part of the remaining oil in the tank may not be removed from a technical or economic point of view.

Therefore, the main risk is not only the reduction of daily production during the war months or the period of peak gas consumption. The more important concern is that the combination of operational disruptions, reduction of gas injection and delay in the implementation of reservoir maintenance plans will weaken a part of the country's future production capacity. In this case, the loss of the oil industry is not limited to the current period and will continue even after the reduction of restrictions.

The hidden cost of gas imbalance for the economy

Developing new fields, drilling new wells, and increasing the recovery rate require investment, specialized equipment, and time. The loss of a part of the existing production capacity, as a result, can make it more difficult to compensate for the loss of production. This issue is of particular importance for an economy that depends on oil revenues, because a sustained decrease in production can affect the ability to export and generate income in the future.

Finally, gas imbalance may have a cost beyond the limits of the industries and increase the pressure on the energy network. When oil production is reduced due to the war conditions and at the same time the supply of gas required by the reservoirs is limited, the risk of damage to the production capacity in the coming years also increases. If this problem is not managed in time, a part of the economic loss will not appear in today's production statistics, but in oil that will not be harvested in the future at a higher cost or even completely.