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Iran Oil Exports Exaggerated, U.S. Officials Say

Iran is exaggerating its crude oil export figures and won’t be allowed to sell more than 1 million barrels a day over the next six months, U.S. officials involved in managing sanctions against the country said.

Iran says it shipped 1.51 million barrels a day in November, according to figures the nation submitted to the Riyadh-based Joint Organisations Data Initiative. The data, along with historical export figures, were published Jan. 20, the same day the U.S. and its allies temporarily eased some of the sanctions against the Persian Gulf state as part of a deal to curb its nuclear program.

The Obama administration said after the Nov. 24 accord was struck that Iran’s exports have been forced down to 1 million barrels a day, a reduction of more than half from 2.5 million a day before U.S. and European Union sanctions were imposed, and won’t be allowed to increase before a final nuclear deal is reached and all sanctions are lifted.

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Iran may be inflating its data to try to set a higher baseline for subsequent negotiations and hoping its elevated numbers will help attract overseas investors, said the U.S. government officials, who spoke on condition of anonymity because they weren’t authorized comment publicly. So far, Iran hasn’t challenged the 1 million barrel-a-day figure in meetings with U.S. negotiators, one of the U.S. officials said Jan. 22.

Contrasting Estimates

The Paris-based International Energy Agency, an adviser to 28 nations, estimated Jan. 21 that buyers imported about 1.07 million barrels a day from Iran in 2013. In contrast, Iran’s own data show shipments fell below 1.5 million barrels a day only once in the past 17 months.

“It creates some confusion to legitimize leakage to that level,” Olivier Jakob, managing director at Petromatrix GmbH, a consultant in Zug, Switzerland, said by e-mail Jan. 20. Still, “with the financial sanctions and the required waivers, it is not really Iran that decides how much it can export.”

Oil prices fell in late November following the accord to constrain Iran’s nuclear program in return for an easing of certain sanctions. Under the accord, Iran’s six remaining crude buyers -- China, India, Japan, South Korea, Turkey and Taiwan -- will be allowed to continue buying at “current levels,” instead of being forced to make further “significant reductions” in volume, as U.S. sanctions law requires.

Lifting Sanctions Against Iran

Energy analysts forecast Brent crude will fall 5 percent to an average $103 a barrel in 2014, partly on bets that exports from OPEC members Iran and Libya will eventually climb, according the median of 34 estimates compiled by Bloomberg.

Iranian President

Iranian President Hassan Rouhani, speaking at the World Economic Forum in Davos, Switzerland, yesterday, said his country has a “strong” will to reach a comprehensive nuclear accord. Rouhani told a meeting of about 30 executives in Davos, mostly from the oil industry, that Iran is a good place to invest.

Christophe de Margerie, chief executive officer of Total SA (FP), said today that Iran is telling oil companies to “be ready” for future work and is willing to modify contract terms in order to attract them, according to an interview with Bloomberg Television in Davos, Switzerland. De Margerie said on Jan. 22 he sees potential for the French oil producer to return to Iran if the sanctions are lifted.

OPEC Data

Some members of the Organization of Petroleum Exporting Countries, notably Iran and Venezuela, regularly report output numbers that exceed consensus estimates, according to the organization’s monthly reports. Export data submitted to JODI fall into the same category, according to analysts at BNP Paribas SA in London and IHS-PFC Energy in Washington.

OPEC’s monthly report on Jan. 16 said the nation’s December crude production was 2.73 million barrels a day when calculated using secondary sources that include analysts and news agencies. That compares with 3.22 million reported directly by Iran to OPEC, the same report showed.

“Essentially, these are not numbers to believe whatsoever,” Jamie Webster, an analyst at IHS-PFC Energy, said of Iran’s submissions, adding that the country may be signaling to other OPEC members they should make way for its eventual return. “I suspect they don’t want to admit just how impacted they have been” by sanctions.

U.S. officials interviewed said their own estimates are based on customs data from importing nations, ship tracking, intelligence reports and sources they won’t disclose.

Add Salt

Officials at Iran’s oil ministry in Tehran declined to comment and said questions should be referred to the country’s oil minister, Bijan Zanganeh.

Iran had not submitted any data to JODI after oil sanctions took effect in July 2012, before resuming this month and supplying numbers dating back to May 2012.

“The JODI figure has to be taken with a healthy pinch of salt,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas. “Given the source of the data, most analysts will discard the figures off the bat.”

Trevor Houser, an energy analyst and partner at Rhodium Group, a New York-based economic research firm, also said JODI’s database of national statistics on production, exports and imports, aren’t reliable.

“Self-reporting is voluntary, so when a country sees it in its interest to misreport, it does, and market participants treat JODI data with a high degree of skepticism,” Houser said in an interview.

To contact the reporters on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net; John Walcott at jwalcott9@bloomberg.net

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