Baku, Azerbaijan, Nov. 6
By Azer Ahmadbayli – Trend:
Iran ranks among the top countries having the world’s greatest oil and gas reserves, and overwhelming majority of its revenues comes from hydrocarbon exports.
Iran also has at least half a century experience in extraction.
But here's the question: how did a country, where oil and gas are strategic commodities, managed to develop complicated nuclear, ballistic missile technologies from scratch, but failed to do the same with its upstream industry so far?
Wouldn't it be obvious for a country, whose wealth is dominantly made of production of hydrocarbons, and which aspires to be a strong, self-sufficient state, to care more about getting its hands on more advanced extraction technologies, as it did with the military ones?
Had Iran possessed them, the officials there wouldn't be expressing concerns about Total's delay in development of the South Pars gas field.
Since the nuclear agreement was signed, Iranian energy officials repeatedly voiced that the country needs $200 billion worth of investments in oil and gas sector. Of that amount, about $130 billion is needed for maintenance of the upstream industry.
Meanwhile, Iran has already reached the pre-sanctions volumes in oil production and is earning a lot of money. What does the country spend it on?
The nuclear program of Iran was launched in the 1950s during the Shah regime as part of the "Atom for Peace" program. Under the program, the United States agreed to provide Tehran with a nuclear research reactor and several power plants.
The US and other European governments participated in development of Iran's nuclear program until 1979, when Iran lived through a revolution. The new Iranian government canceled all the contracts with the US.
It is ironic that the country's new leadership was against the nuclear program considering it a treason to the nation. The then Iranian foreign minister Abbas Ali Khalatbari was sentenced to death on charges of corruption and treason. He was reportedly charged of wasting country's assets signing the contract to build the Iran's first nuclear power plant.
Since the 1979 revolution, young Islamic Republic has found itself under continuous political and economic pressure.
With oil and gas being the main sources of the state’s income, it was about time to ensure relative self-dependence in the oil industry, but it was also important to strengthen the defense capability of the state.
Iran couldn’t afford to pay for both, and preferred to go for the latter.
Now we see that the country is unable to develop complicated hydrocarbon fields on its own, but in contrast, it spends good amount of money to provide support to its military proxies in Iraq and Syria.
As to need in modern upstream technologies, a solution is simple. Iran has enormous amounts of hydrocarbons under its ground and under the sea. A major foreign oil company is invited to perform a full scope of works on a turn-key basis, with the host knowing that it will be done in the shortest terms and with high quality.
Iran sees no problem with sharing income with foreign companies, losing a significant amount of funds essential for its economy – there is still plenty of oil.
I am far from pointing the Iranian government to where to spend money and what development path to take, but it's like a two-way street. Tomorrow, if the sanctions are re-imposed, the Western companies that have advanced technologies will pack up and go, limiting Iran’s ability to produce and sell volumes of oil and gas, enough for the state’s defense capability.