Iran In The Energy Game While Passing Through The Energy Door

Yıl 2016, Sayı: 1, 20 - 31, 30.01.2016

Necdet Karakurt , Serhat Çubukçuoğlu Oğuzhan Akyener

Öz

The Middle East is often
referred to as a perennial geopolitical hotspot, the bedrock of shifting power
play of partnerships, and constant shift of alliances – all in the midst of
emerging and demising local powers. Iran sits at the epicenter of this political,
economic and social development in the neighborhood. On one hand, as a
prominent OPEC member, Iran quietly aims to exert influence through energy
diplomacy in its relentless pursuit to elevate its rank from a regional to
global power status. On the other hand, resting on a young, educated population
with rich energy reserves and vast terminal capacity on the Gulf, Iran’s
engagement in bold expansion policies has an underlying intention to boost its
hegemony in the region and to play the role of a great power in world political
affairs.

Iran is the second
largest economy in the Middle East and North Africa (MENA) after Saudi Arabia –
its main regional rival, whose economic activity and government revenues still
depend largely on oil revenues and therefore remain volatile.[1] While the western
sanctions have reduced Iranian oil exports by about two thirds, causing Iranian
currency “Rial” constantly to depreciate its value, the World Bank estimates
that Iran will grow by 1.9 % in 2015.[2] Iran’s current oil production
is just over 3 million b/d[3] and while this is expected
to increase after the lifting of all sanctions, in reality, it can add no more
than 300,000 – 500,000 b/d barrels to its actual oil production due to fast
depleting oil fields and underinvested infrastructure.[4] Before the Islamic
Revolution, in 1974, Iran was a regional ally of Israel and had received close
support of the U.S. administration to start its controversial nuclear program for
peaceful purposes, due to fast maturing oil fields and excessive production
under the Shah regime. The situation met with bitter sanctions in the wake of
post-revolution Iran-Iraq War, when Iran tried to achieve military
self-sufficiency and re-initiated the program, casting serious concerns in the
west towards Iran’s hidden agenda.

While Iran’s ambitious
plans to reach pre-sanctions oil output is welcome by keen observes in western
energy circles, the truth is that Iran will need years to repair the damage on
its existing infrastructure to reach that capacity amid sharp increase in
domestic consumption. With oil production is at its highest levels since 1960s
and a world-wide excess output of 2m b/d, the profitability of such an
investment on the scale of $200 billion[5] is questionable as oil
markets already face a persistent glut that has more than halved prices in the
past 16 months.[6]
OPEC’s published official statistical data that puts Iran’s proven oil reserves
at 157 bb has been falsified by various researches, the average of whose
estimates is between 30-35 bb.[7] In fact, perhaps
ironically, Iraq, OPEC’s second largest oil producer has almost the double of
this amount at 77 bb, proven but undeveloped reserves, with production cost of
$1 per barrel in contrast to $3-$4 in Iran.[8]

With the nuclear
accord signed between P5+1 and Iran in Vienna on 14th of July 2015,
Iran is expected to gradually lift trade barriers and receive an influx of
western technology to help modernize its aging infrastructure. This will
increase capital investment; enable development projects, and increase
spending. As oil prices begin to surge towards $60-$70 mark by 2017, Iran will
expand trade with its partners, although it is still far over the horizon to
see its production capacity to jump to 5.7m b/d level, or even the 4.8m b/d, as
targeted by Iran’s Ministry of Energy.[9]

Anahtar Kelimeler

Iran In The Energy Game

Kaynakça

• [1] The World Bank, “Iran: Overview,” September 29, 2015 (accessed November 30, 2015); available from http://www.worldbank.org/en/country/iran/overview [2] Ibid. [3] OPEC, “Iran Facts and Figures,” Annual Statistical Bulletin (accessed November 30, 2015); available from http://www.opec.org/opec_web/en/about_us/163.htm [4] Dr. Mamdouh Salameh, “GCC Oil in World Energy Markets: The Return of the Traditional Oil Powers to the World Markets,” The Emirates Center for Strategic Studies and Research, November 24, 2015. [5] Ibid. [6] Financial Times, “Iran vows to reach pre-sanctions oil output” (accessed December 1, 2015); available from http://www.ft.com/intl/cms/s/0/ea34e566-7641-11e5-933d-efcdc3c11c89.html#axzz3t3eZdt5d [7] Dr. Mamdouh Salameh, “GCC Oil in World Energy Markets: The Return of the Traditional Oil Powers to the World Markets,” The Emirates Center for Strategic Studies and Research, November 24, 2015. [8] Ibid. [9] Financial Times, “Iran vows to reach pre-sanctions oil output” (accessed December 1, 2015); available from http://www.ft.com/intl/cms/s/0/ea34e566-7641-11e5-933d-efcdc3c11c89.html#axzz3t3eZdt5d