CALGARY: Iran’s oil exports may be depleted in less than 10 years, as investment in new production fails to offset domestic demand growth, reserves depletion and refinery leaks, a Johns Hopkins University study shows.
An annual export decline rate of 10% to 12% suggests Iran’s exports may drop to zero by 2014 or 2015, according to the study, which will be released later this week online by the Proceedings of the National Academy of Sciences.
“They are compounding away their exports from both sides,’’ author Roger Stern said in a telephone interview. “Their domestic demand is growing at the highest rate of any country in the world, while their depletion rate, on a world basis, is also pretty high.’’
The study’s conclusions may mean Iran’s claim that it needs nuclear energy to preserve its oil exports is “genuine,’’ said Stern, a researcher in the university’s Department of Geography and Environmental Engineering. It underpins the dispute between the US and Iran over the Middle Eastern country’s nuclear stance, he said in the study.
Iran continues to defy demands from the UN to suspend its nuclear programme, saying it’s necessary to generate electricity. Talks on a resolution to pressure Iran to abandon uranium enrichment have been deadlocked for months.
Iran, which pumped 3.76mn bpd in November, is the second-largest producer in the Organisation of Petroleum Exporting Countries behind Saudi Arabia.
Since 1980, Iran’s energy demand growth of 6.4% has exceeded supply growth of 5.6%, with exports stagnant since peaking in 1996, according to Stern. That has prompted Iran to miss production quotas set by the Opec in the past, he added.
Foreign investment in Iran’s oil industry has “greatly deteriorated’’ between 1998 and 2004, a period when investments were insufficient to offset declining output, said Stern.
Iran may face “zero future foreign investment’’ in its oil industry because it prohibits foreign ownership of energy assets.
Development of new production facilities is also hampered by the national oil company’s “inability’’ to lead major project construction, he said. Iran may use declining oil exports as a diplomatic bargaining chip, Stern said.
“US insistence that Iran’s nuclear technology programme has no economic purpose has obscured the regime’s petroleum crisis, of which the nuclear power need is one symptom,’’ he said. “If export decline proceeds as we project, Iran might try to optimise revenue by threatening to cut supply unless some unreasonable concession was met.’’ – Bloomberg
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