Kharg Island, Iran and its energy sector
Donald Trump, U.S. president on Thursday, said that the United States would strike Iran "very heavily tonight". He also stated his desire to seize Kharg Island - the heart of the world's biggest oil producer.
The following are some key facts about Iran's energy sector:
KHARG ISLAND
Iran is the third largest producer of oil in the Organization of Petroleum Exporting Countries. It exports 90% of crude via Kharg Island. This island lies 16 miles (26 kilometers) off the coast of Iran, at the northern end of Gulf and approximately 300 miles (483km) northwest of Strait of Hormuz.
The U.S. has blocked Iranian oil exports in recent weeks, which means that capturing the island by the U.S. would not immediately affect oil shipments.
A?U.S. official said in April that the U.S. military had previously conducted strikes on military targets at Kharg. However, he added that these strikes did not affect oil infrastructure.
The U.S. could severely disrupt Iran's oil trade if they seized Kharg, but Tehran may choose to deploy more mines, including floating mines, to target shipping.
INFRASTRUCTURE AND OIL PRODUCTION
Iran is OPEC’s third largest oil producer. Its fields and facilities are concentrated in the southwestern Provinces of Khuzestan and Bushehr, for oil.
According to a report on OPEC's production, Iran produced 2 million barrels of crude oil per day in?May. This is down from the 3 million barrels bpd of April. This would be around 2% global supply.
According to the consultancy FGE, its domestic?refineries are capable of producing 2.6 million barrels per day. According to analysts and shipping data, Iran's crude oil and condensate exported in May fell to their lowest levels for at least six-years, falling well below 300,000. This was mainly due to the U.S. ban. Vortexa data shows that flows averaged 209,000 bpd, down from 1.34 million in April and almost 1.9 million in March.
Kpler estimates that fuel exports including LPG will average 820,000 barrels per day in 2025. This is slightly less than the levels of 2024. Kpler reported that Iran's floating stock in May dropped to 147 millions barrels, down from 190 million barrels in April.
Who buys Iran's oil? The main buyers are Chinese private refiners. Treasury Department sanctions have been imposed on certain Chinese refiners who purchased Iranian oil.
China has reduced its purchases of Iranian oil, despite its claim that it doesn't recognise unilateral sanctions. Iran has avoided sanctions by using various tactics, including ship-to -ship transfers, masking its origin, and using tanks that can't be tracked using satellites.
Tehran's demand in its talks with the U.S. includes the lifting of sanctions against Iran and the recognition of Iran's control of the Strait of Hormuz.
The World's Largest Gas Reserve
Iran produces natural gases from the South Pars offshore gas field. This gas field is around one-third of the world's largest natural gas reservoir.
Iran's South Pars oil field has been targeted by strikes. In May, Iran resumed gas production at three platforms offshore in the South Pars field after they had been forced into a halt.
Iran shares a reservoir with Qatar, a major exporter. Qatar calls their field North Dome.
The majority of the gas produced by South Pars in Tehran is used for domestic purposes due to sanctions and technical constraints.
According to the Gas Exporting Countries Forum, Iran's total gas production in 2024 will be 276 billion cubic meters, with 94% of that consumed in Iran.
Israel has attacked South Pars twice, in June last year and again this March. Fires have been reported as well as some disruption of operations.
There are 1,800 trillion cubic meters of gas in the reservoir, enough to meet all world needs for 13years.
(source: Reuters)
