(EnergyAsia, August 21 2015, Friday) —Kept out of the international market by trade sanctions for years, Iranian oil could be flowing again a lot sooner than expected following Tehran’s July 14 breakthrough talks with six world powers over its nuclear energy programme. The six, known as the P5+1 group, include the five UN Security Council members comprising the US, China, Britain, Russia and France, plus Germany.

Iranian oil minister Bijan Namdar Zanganeh has ordered domestic companies to step up production and the Iranian Oil Terminals Company to export from its ample stockpiles that could unleash as much as 500,000 b/d of crude into the open markets, according to the local Mehr news agency.

The International Energy Agency (IEA) holds a more bullish view with a projection that Iran, which has the world’s fourth largest recoverable oil reserves of over 157 billion barrels, could easily boost oil production by as much as 730,000 b/d to 3.4 million b/d and 3.6 million b/d within months of the lifting of sanctions.

“While significantly higher production is unlikely before next year, oil held in floating storage – at the highest level since sanctions were tightened in mid-2012 – could start to reach international markets before then,” said the IEA.

The US and its allies have yet to lift sanctions blocking Iran from open trade with other countries for its pursuit of nuclear energy that was feared to be a cover for developing weapons. A final deal would require approval from the US Congress and the Iranian parliament as well as proof of Iran’s implementation of measures preventing weapons development as spelt out in the agreement.

Iran’s oil and gas industry has been hit hard by waves of international sanctions set in 2010 and 2012, which President Obama called “the toughest in history.”

But the signs are encouraging for Iran as the US Treasury and State departments have begun loosening some of the toughest restrictions imposed in 2012 that sharply reduced Iranian oil exports from 2.5 million b/d to just over one million b/d today. Till now, exports have been limited to only six countries, China, India, Japan, South Korea, Taiwan and Turkey, forcing Iran to stockpile the bulk of its currently estimated production of over 2.7 million b/d.

OPEC’s third largest oil producer believes it could attract as much as US$200 billion in new investments to rebuild its creaking, ageing infrastructure if sanctions are completely lifted by next year. Western companies, particularly those from the US, are positioning to actively engage Tehran for fear that Asian companies have had a head-start in building influence and investments in the Middle East powerhouse during the years of trade sanctions.

UK consulting firm Wood Mackenzie is less optimistic that Iran would be in a position to flood the market just yet.

“Even if all parties approve the deal – which is by no means certain – the legal process to remove sanctions could take several months. As a result, we do not expect Iranian crude to flood the market in the near-term,” it said.

While Iran has around 20 million barrels of oil in storage, the UK firm said some of that will be kept for domestic use.

“It could take Iran until the end of 2017 to increase production by as much as 600,000 b/d. There is a great deal of uncertainty over whether there has been any degradation of the reservoirs or facilities while production has been shut in. While well shut-ins may have increased reservoir pressure, it will be hard to quickly reverse the production decline rates experienced over recent years without additional gas re-injection or more enhanced oil recovery schemes,” said Wood Mackenzie.

Iran could unveil new upstream fiscal terms in late 2015 to attract the interest of Western majors Shell, Total and ENI.