The Effect of Sanctions on Iran’s Oil and Gas Industries
Published by majid on Wed, 03/24/2010 - 11:00
The author adduces a series of technological, investment, and marketing evidence and concludes that contrary to the claims made by the leaders of the Islamic Republic, sanctions have had a devastating effect on Iran’s oil and gas industry. In a sense, oil and gas are the Islamic Republic’s Achilles heel. Iran is the biggest consumer of energy in the Middle East and one of the least efficient users of energy in the world. Oil and gas exports provide more than 80 percent of foreign exchange, 70 percent of public investment, and approximately 50 percent of the budget. Yet, the crude oil production capacity, which was 6 million barrels per day before the revolution, is about 4 million barrels today and according to a former minister of oil the productive capacity in mature oil fields is falling by 300 thousand barrels per day annually as a result of faulty or inadequate recovery policies, tools, and methods.
Clearly, since the advent of the Islamic regime Iran’s oil industry has lost a good deal of its efficiency and vitality, a side effect of which has been a deterioration of the enterprises that service the oil industry. Much of this has resulted from the regime’s ideology which on the one hand by alienating nations with best know-how deprives the country of access to the best available science, technology, and practice, and, on other hand, by favoring ideological commitment to professional competency deprives the nation and the industry of the best talent. Given the regime’s apparently inalienable commitment to its ideology, it is difficult to see how the situation in the country may improve under the Islamic Republic.