This piece is an amended extract
from the new book Iran Oil: The New Middle Eastern
order from amazon
Author: Roger Howard
Hardcover: 272 pages
Publisher: I. B. Tauris (January 9, 2007)
In their political armoury, the Iranian mullahs know that their formidable oil weapon takes pride of place. But this is not just for the obvious reason that any major producer of oil can threaten to retaliate against the outside world by cutting back on its output if it doesn’t get what it wants. There are, instead, some much more subtle ways in way the mullahs have already used their energy resources to maximum political effect.
Consider the facts and
figures about Iranian oil that are habitually repeated, like a mantra,
throughout the media.
The truth, however, is really rather different. In the world of oil, there is never really such a thing as a “proven reserve” even at the best of times: “oil data is (always) like paint thrown across a canvass, as one analyst has put it, “you get the broad outline of the situation, but even then the paint later moves of its own accord”. But more importantly, in the world of international affairs there is no way of knowing who is telling the truth about what they do or don’t happen to have: the outside world is forced to take on trust all the assertions about how much oil any particular country says it has.
In the fall of 2003 some
independent analysts were highly sceptical of unexpected
The mullahs have strong
motives to exaggerate the size of these “proven reserves”. They know that, under
OPEC rules, their output of oil depends on how big it says those reserves are: a
higher output obviously means more foreign exchange to keep the regime afloat.
So the mullahs’ dubious self-assessment has often really just been a bid to
convince OPEC that
But the mullahs have
sometimes made announcements about their oil industry at curiously convenient
times, almost as if to tempt international governments with carrots that can win
their support just when
to exploit political fissures that surround their nuclear programme, and adequate testimony to this awareness is their tactic of linking the rewards and penalties yielded by their energy resources with the outside world’s cooperation on the hot political issues of the day.
So it is probably no coincidence that the Iranian authorities have suddenly and unexpectedly announced the discovery of new oil or gasfields, or the availability of new contracts to develop them, just as international negotiations on the nuclear issue have reached important junctures. So on 26 August 2002, just days after the world had been shocked by the exposure of a covert uranium enrichment programme, the Iranian Oil Minister Bijan Namdar Zangeneh had held a press conference and announced that at least 50 billion barrels of new oil reserves had been found in Iran in the course of the preceding four and a half years. And when the following year controversy over the issue flared up again, as Iranian officials denied weapons inspectors access to one of their suspected nuclear facilities, the director of Iran's Oil Development and Engineering Company (ODEC) on 14 July suddenly announced the discovery of another new reserve, not far from the Iranian Persian Gulf port of Bushehr, whose estimated 38 billion barrel deposits promised to make it the world's second biggest oil field after Saudi Arabia's Ghawar development. More was to come, for in March 2005, as the Iranians tried to extract as much concession as they could from European negotiators in return for surrendering their nuclear ambitions, Zanganeh announced that new oil and gas fields have been discovered in the southern province of Khuzestan and south of the South Pars gas field in Bushehr province, with an estimated capacity of 5,700 million barrels of oil.
The Iranians have made similarly
dubious claims about the size of their natural gas reserves. These announcements
have to be viewed with a sceptical eye because it is likely that they have
sometimes reflected ulterior motives, such as an effort to lure outside
investment or lure the outside world when
No one disputes that Iran has huge potential as a major player in the future oil industry, and while in recent years Iranian wells have certainly been producing oil at a sharp rate- between 3.5 and 4.2 million barrels every day, which amounts to around 4% of global production- most analysts reckon that, with sufficient investment, they have the potential to increase such capacity considerably.
But next time you hear
the mullahs, or anyone, talk about their “proven reserves” of oil and gas, be on
[i] ‘Iranian Oil Industry: A Status Report’ , November 2003, FACTS Inc.
[ii] See also Chapter Two pp 18-21
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