Sometimes a lack of oil is just a lack of oil
Last time I wrote on Iraq. This time let’s move slightly east to next door Iran. As everyone now knows last Friday the United Nations Security Council voted 15 to 0 to approve Resolution 1737, which impose sanctions on Iran for its nuclear program for the first time, including a ban on acquisition of materials and technology that might be used to build an atomic bomb.
The measure demands that Iran halt uranium enrichment and heavy-water projects that the U.S. and its European allies have said may lead to the development of nuclear weapons. It freezes the financial assets of 12 named individuals and 11 groups such as the Atomic Energy Organization of Iran. The resolution also requires the UN’s nuclear watchdog agency, the International Atomic Energy Agency, to report on Iran’s compliance within 60 days. “Further appropriate measures” such as economic penalties and severance of diplomatic relations will be required if Iran doesn’t comply, it says
As a rule in my view sanctions are not particularly effective as instruments for effecting policy change. While they may be a face saving and perhaps even necessary compromise between doing nothing and going to war they usually, with admittedly rare exceptions, don’t accomplish all that much. Some, as this Israeli writes, thinks it is worse than nothing.
But what I really find interesting is an article in the Proceedings of the National Academy of Sciences which was published online Dec. 26. The author, Roger Stern of Johns Hopkins University examines the presumption that is so often cited by those who wish to attack Iran; i.e., that what does a country with so much hydrocarbon resources (oil and natural gas) need with nuclear power?
Stern writes:
The U.S. case for action against Iran is based on its deceptions with respect to the Treaty on the Nonproliferation of Nuclear Weapons (NPT). However, this case is buttressed with assertions about Irani petroleum:
Finally, there is Iran’s claim that it is building massive and expensive nuclear fuel cycle facilities to meet future electricity needs, while preserving oil and gas for export. All of this strains credulity. Iran’s gas reserves are the second largest in the world. [Yet] Iran flares enough gas annually to generate electricity equivalent to the output of four Bushehr reactors.
Given the historic difficulties that U.S. policymakers have had with petroleum economics, it seems possible that these assertions are wrong. Iran is guilty of NPT deceptions, but it cannot be inferred from this that all Irani claims must be false. The regime’s dependence on export revenue suggests that it could need nuclear power as badly as it claims. Recent analyses by former National Iranian Oil Company (NIOC) officials project that oil exports could go to zero within12–19 years. It therefore seems possible that Iran’s claim to need nuclear power might be genuine, an indicator of distress from anticipated export revenue shortfalls. If so, the Irani regime may be more vulnerable than is presently understood. Here we survey Iran’s petroleum economy for evidence of oil export decline that might suggest such vulnerability. Stern’s conclusion is:Stern’s conclusion is:Stern’s conclusion is:Stern’s conclusion is: Stern’s conclusion is: The oil export decline we project implies that Iran’s claim to need nuclear power to preserve exports is genuine. U.S.insistence that Iran’s nuclear technology program has no economic purpose has obscured the regime’s petroleum crisis, of which the nuclear power need is one symptom.
Stern’s conclusion is: In short Iran is suffering a staggering decline in revenue from its oil exports, and if the trend continues income could virtually disappear by 2015. Stern’s article only confirms what any reasonably thoughtful person (okay, that excludes Rush Limbaugh and Bill O’Reilly) should be able to figure out.
For starters, Iran’s energy situation today is quite different from the late 1970s. Consider that just a year or so prior to the 1979 Revolution, Iran was producing 6 million barrels a day (mbl/d) of oil and its domestic consumption was less than 10 per cent of that output. Its annual natural gas production (almost all in the form of a high quality gas) was roughly 12 billion cubic meters of which some 9.5 billion cubic meters was exported to the Soviet Union and only 20 per cent was consumed domestically. Iran’s population was then 35 million.
Today, Iran has a population of over 65 million. The country produces some 4 mmb/d of oil (down a third from its 1974 level) of which almost half is now consumed domestically. Years of political isolation, recurring war and US sanctions have deprived the oil sector of needed investment. Iran’s share of total world oil trade peaked at 17.2 per cent in 1972, then declined to 2.6 per cent in 1980, and is now around 5 per cent.
Iran’s natural gas production has skyrocketed to 79 bn m3 /year with a large proportion being consumed domestically. This is likely to change in the near future however, since Iran has signed gas contracts with China and India, which will mean a larger proportion of what it produces going for export. Currently, however, at 5 bn m3 /year, its imports (from the Caspian) exceed its exports of 3.5 bn m3 /year.
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Iran should have equal right as anyother sovreign country to opt for any option for its own energy security.If it wants to cut down oil and gas production to prololong its reserve depletion and generate nuclear power UN or for that matter world community must not interfere.But while Nuclear armed countries are performing their act with very little control why Iran or for that matter a particular country will be pressurized to abandon the plan.Is it not a double standard that ? Which other country has more weapons of mass destruction than the country which leads the so called war against WMD.
It is felt that Iran should be monitored closely but economic sanction may prove counter productive.It will affect innocent people and not war mongres.
Comment on December 30, 2006 @ 9:44 pm
Saleque Sufi’s point is surely the fundamental one. Iran is a sovereign nation and must be left to take decisions in its own interest, provided they do not intrude on the territorial integrity and human rights of others. Roger Stern’s analysis is a useful corrective to the hysteria surrounding what is, after all, a very distant (10+ years) threat, if it exists at all. And it is not new. I was told by an official in the Kuwait oil ministry 25 years ago that Kuwait might be interested in nuclear because “It releases oil for export and it only costs us money!” Rather sweet, you might say, and certainly innocent. Oil exporters are interesting in exporting oil.
The disingenuousness of American policy in the region does not incline me to accept their present moralistic and warlike noises, any more than it did before the Iraq invasion. When so many and such specious reasons are being offered, you know you are being conned. The question is, What is the con? And the answer has to be oil, Israel and regional hegemony.
If the US administration were really interested in removing the nuclear threat, they would make a start by pushing for the de-nuclearisation of the Middle East. Then at least there would be no suggestion of double standards. But, when there is no suggestion that Israel should lose its nuclear weapons, what is the rest of the world to think? What else except that US foreign policy is driven by nothing more elevated than the need to maintain its control of strategic areas. Compliant and/or useful friends, like Pakistan and Israel, are allowed freedoms rigorously to be suppressed in any country that shows any sign of independence.
If this is realpolitik, so be it. But let us see it for what it is and, please, lets not dress it up as a moral crusade. The US is not interested in peace, it is a colonial power interested only in control.
Comment on December 31, 2006 @ 7:02 am
Un should try to diffuse tension and try its best to protect innocent people while war mongers are always looking for excuse to flex their muscles.The world community failed to stop Iraq war. now if Iran crisi culminate in another awr that will destabilise world peace and billions of innocent people all over the world will suffer. Can all parties behave rationally. It is not very difficult to establish whether British marine intruded Irania territorial water or not. Even if they crossed let this be reolved ammicably before things go beyond control.
Comment on March 27, 2007 @ 9:49 pm
Middle East is the hotbed of conflicts because of its oil. Iran being a country that refuses to accept the way USA or its allies want it behave, have become one of the axis of evils. The analyses above by the writer and also Sufi Saleque are quite rational . For energy security any country has the right to work on its own strategy. Fossil fuel is finite and will end some day. The middle eas oil is approaching its fast depletion.Now these rulers, who have little obligations to their people, may bow down to their master – but Iran being somewhat different from others, shall naturally think of its future in the event of oil being sucked up completely.USA being the sole superpower, does behave with little respect towards others and during the regime of Bush acted on pretexts and not reasons and facts to attack and impose its will. The holding of huge nuclear arsenals by USA and Israel, which everyone is aware of, does this country has any credibility to teach morality and responsibility to others? USA, instead, should take the lead to destroy all its and its allies nuclear ursenals and work out to destroy the same from others as well including India, Pakistan and other members of the security council. USA should remember that its power and capacity to harm and threat others wont remain forever and before it is too late, it is important that USA should change its course of conducts and as it appears, President Obama is moving in that direction.
Comment on March 21, 2009 @ 11:22 pm