Energy resources of Iran

Energy resources of Iran consist of the second largest oil reserves and the fourth largest natural gas reserves in the world. Iran is in a constant battle to use its energy resources more effectively in the face of subsidization and the need for technological advances in energy exploration and production.

Background

Iran is one of the leading members of OPEC (Organization of Petroleum Exporting Countries). According to data from 2006, Iran holds the world’s second largest supply of oil and natural gas reserves, trailing only Saudi Arabia and Russia respectively. Iran received $47 billion dollars in oil export revenues, which accounts for about 50% of state revenues. [BBC News, “Iran Energy: Overview”, http://news.bbc.co.uk/1/hi/world/middle_east/4688984.stm, April 1, 2008.] Natural gas and oil consumption both account for about half of Iran’s domestic energy consumption. With its heavy dependence on oil and gas revenues Iran continues to explore for new sources of natural gas and oil. Recently Iran has focused it energy sector on the exploration of the South Pars offshore natural gas fields in the Persian Gulf.EIA, “Iran’s Energy Data”, http://www.eia.doe.gov/emeu/cabs/Iran/Background.html, April 1, 2008.]

Oil

According to 2006 estimates Iran produced about five percent of total global crude oil production. They produced convert|4.2|Moilbbl/d|m3/d of total liquids and 3.8 million of those barrels were crude oil. Iran contains roughly ten percent of the world’s total petroleum reserves and that figures out to be about convert|136|Goilbbl|m3 of oil reserves. Iran contains 27 onshore and 13 offshore oil producing fields which are largely concentrated in the southwestern Khuzestan region near the Iraqi border. The Iranian government is heavily reliant on oil revenues and they have heavily subsidized the energy industries which figures out to be about 12 percent of Iran’s GDP. However, domestic oil consumption has decreased due to the alternative use of natural gas. Economic growth from these resources is uncertain and stunted in Iran due to these subsidies and population growth. Iran has been unable to reach it full production levels due to a combination of sanctions and war which has plagued the region. Iran’s oil fields have a natural decline rate at 8 percent for onshore wells and 10 percent for offshore fields. The Iranian recovery rate is currently approximately 27 percent which is well below the world average. Iran needs structural improvements made to coincide with their enhanced oil recovery efforts.

Natural gas

Iran holds the worlds second largest natural gas reserves. It contains an estimated convert|974|Tft3|km3 in natural gas reserves. About 62 percent of these reserves are located in non-associated fields. Iranian production of natural gas is expected to increase over the next few years due to continuing discoveries in the North Pars and South Pars regions. [http://en.wikipedia.org/wiki/National_Iranian_Gas_Company] Domestic consumption has matched production at 3.6 Tcf in the year of 2005. Domestic consumption is expected to go up at about 7 percent per year for the following decade. The Iranian government has also subsidized natural gas prices along with gasoline prices, and this is expected to sustain this high level of domestic consumption. In lieu of this increasing domestic demand, natural gas exports are expected to decrease in the following years. [EIA, “Iran’s Energy Data”, http://www.eia.doe.gov/emeu/cabs/Iran/Background.html, April 1, 2008]

Electricity

Iran’s domestic consumption and production have steadily grown together since 1984 and it is still heavily reliant on traditional thermal energy sources of electricity, with a small fraction being produced by hydroelectric plants. [http://www.iran-daily.com/1387/3103/html/economy.htm#s295833, retrieved April 2, 2008.] Consumption has steadily risen and it is expected to rise at about 6 percent per year for the following decade. Accordingly, the Iranian energy sector must focus its efforts on meeting this continuing demand. The exploration efforts for sources of power generation are wide and diverse in Iran. Plans are being made to make oil efficient power plants as well as an emphasis on natural gas production in order to meet their growing electricity demand. Nuclear power and hydroelectric power are not focused on for the time being, but they are part of an overall strategy to meet electricity demands. The electricity sector is also heavily subsidized and mostly state owned companies control power distribution, transmission and generation. In order to meet the demands of the electricity sector, however, Iran is beginning to look into private investment. [EIA, “Iran’s Energy Data”, http://www.eia.doe.gov/emeu/cabs/Iran/Background.html, Retrieved April 2, 2008]

ee also

* Nuclear program of Iran

References