Iran
Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
is an
energy superpower
An energy superpower is a country that supplies large amounts of energy resources (crude oil, natural gas, coal, etc.) to a significant number of other countries, and therefore has the potential to influence world markets to gain a political or ec ...
and the petroleum industry in Iran plays an important part in it. In 2004, Iran produced 5.1 percent of the world's total
crude oil
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...
( per day), which generated revenues of US$25 billion to US$30 billion and was the country's primary source of
foreign currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general de ...
.
[ At 2006 levels of production, oil proceeds represented about 18.7% of ]gross domestic product
Gross domestic product (GDP) is a money, monetary Measurement in economics, measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjec ...
(GDP). However, the importance of the hydrocarbon
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and hydrophobic, and their odors are usually weak or ...
sector to Iran's economy has been far greater. The oil and gas industry has been the engine of economic growth, directly affecting public development projects, the government's annual budget, and most foreign exchange sources.[
In FY 2009, the sector accounted for 60% of total government revenues and 80% of the total annual value of both exports and foreign currency earnings. Oil and gas revenues are affected by the value of crude oil on the international market. It has been estimated that at the ]Organization of the Petroleum Exporting Countries
The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headquart ...
(OPEC) quota level (December 2004), a one-dollar change in the price of crude oil on the international market would alter Iran's oil revenues by US$1 billion.
In 2012, Iran, which exported around 1.5 million barrels of crude oil a day, was the second-largest exporter among the Organization of Petroleum Exporting Countries. In the same year, officials in Iran estimated that Iran's annual oil and gas revenues could reach $250 billion by 2015.[Mehr News Agency: Iran eyes $250 billion annual revenue in 5 years](_blank)
Retrieved December 22, 2010 However, the industry was disrupted by an international embargo from July 2012 through January 2016. Iran plans to invest a total of $500 billion in the oil sector before 2025.[Iran Daily - Domestic Economy - 04/24/08](_blank)
[
]
History
The era of international control, 1901–1979
The history of Iran's oil industry began in 1901, when British
British may refer to:
Peoples, culture, and language
* British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Dependencies.
** Britishness, the British identity and common culture
* British English, ...
speculator William D'Arcy received a concession from Iran to explore and develop southern Iran's oil resources. The exploration in Iran was led by George Reynolds. The discovery of oil on May 26, 1908 led to the formation in 1909 of the London-based Anglo-Persian Oil Company (APOC). By purchasing a majority of the company's shares in 1914, the British government gained direct control of the Iranian oil industry, which it would not relinquish for 37 years. After 1935 the APOC was called the Anglo-Iranian Oil Company (AIOC). A 60-year agreement signed in 1933 established a flat payment to Iran of four British pounds for every ton of crude oil exported and denied Iran any right to control oil exports.
In 1950 ongoing popular demand prompted a vote in the Majlis to nationalize the petroleum industry. A year later, the government of Prime Minister Mohammad Mossadeq
Mohammad Mosaddegh ( fa, محمد مصدق, ; 16 June 1882 – 5 March 1967) was an Iranian politician, author, and lawyer who served as the 35th Prime Minister of Iran from 1951 to 1953, after appointment by the 16th Majlis. He was a member of ...
formed the National Iranian Oil Company
The National Iranian Oil Company (NIOC; fa, شرکت ملّی نفت ایران, Sherkat-e Melli-ye Naft-e Īrān) is a government-owned national oil and natural gas producer and distributor under the direction of the Ministry of Petroleum of ...
(NIOC). A 1953 coup d'état led by British
British may refer to:
Peoples, culture, and language
* British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Dependencies.
** Britishness, the British identity and common culture
* British English, ...
and U.S. intelligence
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
agencies ousted the Mossadeq government and paved the way for a new oil agreement. In 1954 a new agreement divided profits equally between the NIOC and a multinational consortium that had replaced the AIOC. In 1973 Iran signed a new 20-year concession with the consortium.
Beginning in the late 1950s, many of Iran's international oil agreements did not produce the expected outcomes; even those oil companies that managed to extract oil in their designated areas contributed very little to the country's total oil production. By the time of the Islamic Revolution of 1978–79, the five largest international companies that had agreements with the NIOC accounted for only 10.4 percent of total oil production. During this period, Iran's oil industry remained disconnected from other industries, particularly manufacturing. This separation promoted inefficiencies in the country's overall industrial economy.[
In 1973, at a time when Iran was the second-largest oil exporter in the world and the Arab–Israeli War of October 6–25 was pressurizing the price of oil, the ]Shah of Iran
This is a list of monarchs of Persia (or monarchs of the Iranic peoples, in present-day Iran), which are known by the royal title Shah or Shahanshah. This list starts from the establishment of the Medes around 671 BCE until the deposition of th ...
told the ''New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'', "Of course the world price of oil is going to rise. ... Certainly! And how ...; You estern nationsincreased the price of wheat you sell us by 300%, and the same for sugar and cement ...; You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us ...; It's only fair that, from now on, you should pay more for oil. Let's say ten times more."
The era of nationalized oil, 1979–present
Isolation and stagnation under Khomeini
Following the Revolution, the NIOC took control of Iran's petroleum industry and canceled Iran's international oil agreements. In 1980 the exploration, production, sale, and export of oil were delegated to the Ministry of Petroleum. Initially Iran's post-revolutionary oil policy was based on foreign currency requirements and the long-term preservation of the natural resource. Following the Iran–Iraq War
The Iran–Iraq War was an armed conflict between Iran and Iraq that lasted from September 1980 to August 1988. It began with the Iraqi invasion of Iran and lasted for almost eight years, until the acceptance of United Nations Security Council ...
, however, this policy was replaced by a more aggressive approach: maximizing exports and accelerating economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
. From 1979 until 1998, Iran did not sign any oil agreements with foreign oil companies.
Khatami era
Early in the first administration of President Mohammad Khatami (in office 1997–2005), the government paid special attention to developing the country's oil and gas industry. Oil was defined as inter-generational capital and an indispensable foundation of economic development
In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...
. Thus, between 1997 and 2004 Iran invested more than US$40 billion in expanding the capacity of existing oil fields and discovering and exploring new fields and deposits. These projects were financed either in the form of joint investments with foreign companies or domestic contractors or through direct investment by the NIOC. In accordance with the law, foreign investment in oil discovery was possible only in the form of buyback agreements under which the NIOC was required to reimburse expenses and retain complete ownership of an oil field. Marketing of crude oil to potential buyers was managed by the NIOC and by a government enterprise called Nicoo. Nicoo marketed Iranian oil to Africa, and the NIOC marketed to Asia and Europe.[ According to IHS CERA estimate, oil revenue of Iran will increase by a third to ]USD
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
100 billion in 2011 even though the country is under an extended period of U.S. sanctions
After the failure of the Embargo Act of 1807, the federal government of the United States took little interest in imposing embargoes and economic sanctions against foreign countries until the 20th century. United States trade policy was entirely a ...
.
Post-JCPOA era
The signing of the JCPOA
The Joint Comprehensive Plan of Action (JCPOA; fa, برنامه جامع اقدام مشترک , barnāmeye jāme'e eqdāme moshtarak (, ''BARJAM'')), commonly known as the Iran nuclear deal or Iran deal, is an agreement on the Iranian nuclear ...
in July 2015 by Hassan Rouhani
Hassan Rouhani ( fa, حسن روحانی, Standard Persian pronunciation: ; born Hassan Fereydoun ( fa, حسن فریدون, links=no); 12 November 1948) is an Iranian politician who served as the seventh president of Iran from 2013 to 2021. ...
and Javad Zarif
Mohammad Javad Zarif Khansari ( fa, محمدجواد ظریف خوانساری, Mohammad-Javād Zarīf Khānsāri ; ; born 8 January 1960) is an Iranian career diplomat and academic. He was the foreign minister of Iran from 2013 until 2021 in th ...
with Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
heralded a new era of détente in foreign relations. With it, Iran was allowed to come in from the cold, as it were and once again to sell its oil unencumbered on the world stage. The withdrawal by Donald Trump from the JCPOA in May 2018 was an ill wind for Iran because he decided to re-apply the sanctions regime that had caused such difficulties to Khamenei
Sayyid Ali Hosseini Khamenei ( fa, سید علی حسینی خامنهای, ; born 19 April 1939) is a Twelver Shia '' marja and the second and current Supreme Leader of Iran, in office since 1989. He was previously the third president ...
. For example, the ''Grace 1'' oil tanker was captured near Gibraltar
)
, anthem = " God Save the King"
, song = " Gibraltar Anthem"
, image_map = Gibraltar location in Europe.svg
, map_alt = Location of Gibraltar in Europe
, map_caption = United Kingdom shown in pale green
, mapsize =
, image_map2 = Gib ...
in July 2019 at the request of the US by the armed forces of the UK. The incident was one of several that have been labelled as the 2019 Persian Gulf crisis, but the crisis soon widened to encompass more distant seas where Iranian arms are impotent. In May the Iranian tanker ''Happiness 1'' suffered difficulties near Jiddah
Jeddah ( ), also spelled Jedda, Jiddah or Jidda ( ; ar, , Jidda, ), is a city in the Hejaz region of the Kingdom of Saudi Arabia (KSA) and the country's commercial center. Established in the 6th century BC as a fishing village, Jeddah's pro ...
. In August the tanker ''Helm'' encountered difficulties while transiting the Red Sea
The Red Sea ( ar, البحر الأحمر - بحر القلزم, translit=Modern: al-Baḥr al-ʾAḥmar, Medieval: Baḥr al-Qulzum; or ; Coptic: ⲫⲓⲟⲙ ⲛ̀ϩⲁϩ ''Phiom Enhah'' or ⲫⲓⲟⲙ ⲛ̀ϣⲁⲣⲓ ''Phiom ǹšari''; T ...
, and in October the Iranian tanker '' Sabiti'' was attacked by two missiles of unknown origin, again in the Red Sea. The fully laden ''Sabiti'' had been destined for the "Eastern Mediterranean".
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
is a significant supporter of the Iranian petroleum industry. In 2017, 64% of an export total $16.9 billion with China was labelled "crude oil". Because the National Iranian Tanker Company
The National Iranian Tanker Company (NITC, fa, شرکت ملی نفتکش ایران, ''Shirkat-e Mili-ye Nuftekâshi-ye Iran'') is a subsidiary of the National Iranian Oil Company, which was privatized in 2009. As of 2011, NITC was owned by fu ...
cannot defend the product on the oceans, it most often leaves port under the flag of another nation which is able to defend its own interests. The case of a Shanghai
Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
-based operator of oil tankers, Kunlun Holdings is illustrative: in early June it was operating with a shipment of Iranian crude oil as the ''Pacific Bravo'' before its transponder disappeared on 5 June in the Straits of Malacca. When it reappeared on 18 July, the ship had been relieved of its load and had been renamed to become the ''Latin Venture''. The US, which had warned ports not to offload the $120 million cargo of the ''Pacific Bravo'', was unhappy about the failure of its sanctions regime. Kunlun Holdings is owned by the Bank of Kunlun
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
, which is in turn owned by the (SOE) CNPC
The China National Petroleum Corporation (CNPC) () is a major national oil and gas corporation of China and one of the largest integrated energy groups in the world. Its headquarters are in Dongcheng District, Beijing. CNPC was ranked fourth ...
. The Bank "has long been the financial institution at heart of China-Iran bilateral trade". Chinese foreign ministry
The Ministry of Foreign Affairs of the People's Republic of China () is the first-ranked executive department of the State Council of the Chinese government, responsible for the foreign relations of the People's Republic of China. It is led ...
spokesperson Geng Shuang
Geng Shuang (; born April 1973) is a Chinese politician serving as China's Deputy Permanent Representative to the United Nations. He formerly served as the deputy director of the Foreign Ministry Information Department of the People's Republic o ...
"resolutely opposes" American unilateral sanctions.
Oil production and reserves
Total oil production reached a peak level of in 1976. By 1978, Iran had become the second-largest OPEC
The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headquart ...
producer and exporter of crude oil and the fourth-largest producer in the world. After a lengthy decline in the 1980s, production of crude oil began to increase steadily in 1987. In 2008 Iran produced per day (bpd) and exported . Accounting for 5 percent of world production, it returned to its previous position as OPEC's second-largest producer. According to estimates, in 2005 Iran had the capacity to produce ; it was believed that production capacity could increase to to , but only with a substantial increase in foreign investment. Iran's long-term sustainable oil production rate is estimated at .[ According to the Iranian government, Iran has enough reserves to produce oil for the next 100 years while oil reserves of other Middle Eastern countries will be depleted in the next 60 years and most other oil-rich countries will lose their reserves within the next 30 years.
In 2006 Iran reported crude oil reserves of , accounting for about 15 percent of OPEC's proven reserves and 11.4 percent of world proven reserves. While the estimate of world crude oil reserves remained nearly steady between 2001 and 2006, at , the estimate of Iran's oil reserves was revised upward by 32 percent when a new field was discovered near ]Bushehr
Bushehr, Booshehr or Bushire ( fa, بوشهر ; also romanised as ''Būshehr'', ''Bouchehr'', ''Buschir'' and ''Busehr''), also known as Bandar Bushehr ( fa, ; also romanised as ''Bandar Būshehr'' and ''Bandar-e Būshehr''), previously Antioc ...
. Market value of Iran's total oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
reserves at international crude price of $75 per barrel stands at ~US $10 trillion.
In the early 2000s, leading international oil firms from China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
, India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
, Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
, the Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
, Norway
Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
, Russia
Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
, Spain
, image_flag = Bandera de España.svg
, image_coat = Escudo de España (mazonado).svg
, national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond")
, national_anthem = (English: "Royal March")
, i ...
, and the United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
had agreements to develop Iran's oil and gas fields. In 2004 China signed a major agreement to buy oil and gas from Iran, as well as to develop Iran's Yadavaran oil field. The value of this contract was estimated at US$150 billion to US$200 billion over 25 years.[ In 2009, China National Petroleum Corp (CNPC) signed a deal with the National Iranian Oil Company whereby the former took ownership of
a 70% stake upon promising to pay 90 percent of the development costs for the South Azadegan oil field, with the project needing investment of up to $2.5 billion. Earlier that year, CNPC also won a $2 billion deal to develop the first phase of the North Azadegan oilfield.
A more modest yet important agreement was signed with ]India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
to explore and produce oil and natural gas in southern Iran. In 2006 the rate of production decline was 8 percent for Iran's existing onshore oil fields (furnishing the majority of oil output) and 10 percent for existing offshore fields. Little exploration, upgrading, or establishment of new fields occurred in 2005–6.[ However, the threat of American retaliation kept the investment way below the desired levels. It only allowed Iran to continue to keep its oil export at or below its OPEC determined quota level. Today, much of the equipment needed for oil industry are being produced by local manufacturers in Iran. Besides, Iran is among the few countries that has reached the technology and "know-how" for drilling in the deep waters.
]
Oil refining and consumption
In 2011 Iran's refineries had a combined capacity of . The largest refineries have the following capacities: Abadan, ; Esfahan, ; Bandar-e Abbas, ; Tehran, ; Arak, ; and Tabriz, . In 2004 pipelines conveyed 69 percent of total refined products; trucks, 20 percent; rail, 7 percent; and tankers, 4 percent. Oil refining produces a wide range of oil products, such as liquefied petroleum gas
Liquefied petroleum gas (LPG or LP gas) is a fuel gas which contains a flammable mixture of hydrocarbon gases, specifically propane, propylene, butylene, isobutane and n-butane.
LPG is used as a fuel gas in heating appliances, cooking e ...
(LPG), gasoline
Gasoline (; ) or petrol (; ) (see ) is a transparent, petroleum-derived flammable liquid that is used primarily as a fuel in most spark-ignited internal combustion engines (also known as petrol engines). It consists mostly of organic co ...
, kerosene
Kerosene, paraffin, or lamp oil is a combustible hydrocarbon liquid which is derived from petroleum. It is widely used as a fuel in aviation as well as households. Its name derives from el, κηρός (''keros'') meaning "wax", and was regi ...
, fuel oil
Fuel oil is any of various fractions obtained from the distillation of petroleum (crude oil). Such oils include distillates (the lighter fractions) and residues (the heavier fractions). Fuel oils include heavy fuel oil, marine fuel oil (MFO), bun ...
, and lubricants
A lubricant (sometimes shortened to lube) is a substance that helps to reduce friction between surfaces in mutual contact, which ultimately reduces the heat generated when the surfaces move. It may also have the function of transmitting forces, t ...
.[ Iran is a net exporter of petroleum products thanks to large exports of residual fuel oil, but the refineries cannot meet domestic demand for lighter distillates such as gasoline.]
Between 1981 and 2010, domestic consumption of oil products increased from to —an average annual growth rate of 3.7 percent. Between 1981 and 2004, consumption of gasoline grew by 6 percent annually, but domestic production met only 75 percent of demand for this product. In 2004 the country imported US$1.6 billion worth of gasoline. By 2006 it imported 41 percent of its gasoline, but by 2010 imports were down to 19.5% of gasoline consumption and heavy investment in new refining capacity may see Iran exporting gasoline by 2015. Refining capacity increased 18% in 2010 and the target is to increase refining capacity to 3.5 million barrels per day.
Trade in oil and oil products
In 2006 exports of crude oil totaled , or about 62.5 percent of the country's crude oil production. The direction of crude oil exports changed after the Revolution
In political science, a revolution (Latin: ''revolutio'', "a turn around") is a fundamental and relatively sudden change in political power and political organization which occurs when the population revolts against the government, typically due ...
because of the U.S. trade embargo on Iran and the marketing strategy of the NIOC
The National Iranian Oil Company (NIOC; fa, شرکت ملّی نفت ایران, Sherkat-e Melli-ye Naft-e Īrān) is a government-owned national oil and natural gas producer and distributor under the direction of the Ministry of Petroleum of Ir ...
. Initially, Iran's post-revolutionary crude oil export policy was based on foreign currency requirements and the need for long-term preservation of the natural resource. In addition, the government expanded oil trade with other developing countries. While the shares of Europe, Japan, and the United States declined from an average of 87 percent of oil exports before the Revolution to 52 percent in the early 2000s, the share of exports to East Asia (excluding Japan) increased significantly. In addition to crude oil exports, Iran exports oil products. In 2006 it exported of oil products, or about 21 percent of its total oil product output. Iran plans to invest a total of $500 billion in the oil sector before 2025.[
In 2010, Iran, which exports around 2.6 million barrels of crude oil a day, was the second-largest exporter among the ]Organization of Petroleum Exporting Countries
The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headquart ...
. Several major emerging economies depend on Iranian oil: 10% of South Korea's oil imports come from Iran, 9% of India's and 6% of China's.[ Moreover, Iranian oil makes up 7% of Japan's and 30% of all Greece's oil imports.][ Iran is also a major oil supplier to Spain and Italy.][
In the same year, officials in Iran estimate that Iran's annual oil and gas revenues could reach $250 billion by 2015 once the current projects come on stream.]
According to IHS CERA estimate, oil revenue of Iran will increase by a third to USD
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
100 billion in 2011 even though the country is under an extended period of U.S.
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
sanctions. As of January 2012, Iran exports 22% of its oil to China, 14% to Japan, 13% to India, 10% to South Korea, 7% to Italy, 7% to Turkey, 6% to Spain and the remainder to France, Greece (& other European countries), Taiwan, Sri Lanka, South Africa.
In 2020 exports of petrochemicals and petroleum products were worth almost $20 billion.
File:Iranoilandgas.jpg, Iran's projected oil and gas revenues by the International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
.
File:Oil Exports Table 1H2011.gif, Iran crude oil and condesate exports for key countries.
File:Iran Export Treemap.jpg, Iran export treemap (2010).
File:Oil natural gas infrastructure.png, Iran's oil and natural gas pipelines.
Natural gas
In addition to the natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
associated with oil exploration and extraction, an estimated 62 percent of Iran's 32.3 trillion cubic meters of proven natural gas reserves in 2006 were located in independent natural gas fields, an amount second only to those of Russia. In 2006 annual production reached 105 billion cubic meters, with fastest growth occurring over the previous 15 years. In 2006 natural gas accounted for about 50 percent of domestic energy consumption
Domestic energy consumption is the total amount of energy used in a house for household work. The amount of energy used per household varies widely depending on the standard of living of the country, the climate, and the age and type of residence. ...
, in part because domestic gas prices were heavily subsidized.[ Natural gas production will reach 700 million cubic meter/day by 2012 and 900 million cubic meter/day by 2015.
Since 1979, infrastructure investment by Iranian and foreign oil firms has increased pipeline capacity to support the Iranian gas industry. Between 1979 and 2003, pipelines to transport natural gas to refineries and to domestic consumers increased from 2,000 kilometers to 12,000 kilometers. In the same period, natural gas distribution pipelines increased from 2,000 kilometers to 45,000 kilometers in response to growing domestic consumption. Gas processing plants are located at Ahvaz, Dalan, Kangan, and Marun, in a corridor along the northern ]Persian Gulf
The Persian Gulf ( fa, خلیج فارس, translit=xalij-e fârs, lit=Gulf of Persis, Fars, ), sometimes called the ( ar, اَلْخَلِيْجُ ٱلْعَرَبِيُّ, Al-Khalīj al-ˁArabī), is a Mediterranean sea (oceanography), me ...
close to the major gas fields. South Pars
The South Pars/North Dome field is a natural-gas condensate field located in the Persian Gulf. It is by far the world's largest natural gas field, IEA, World Energy Outlook 2008 - Chapter 12 - Natural gas resources and production prospects, p.298 ...
, Iran's largest natural gas field, has received substantial foreign investment. With its output intended for both export and domestic consumption, South Pars is expected to reach full production in 2015. However, delays and lower production in the Iranian side due to sanctions is resulting in migration of gas to the Qatari part and a loss for Iran.
The output of South Pars is the basis of the Pars Special Economic Energy Zone, a complex of petrochemical and natural gas processing plants and port facilities established in 1998 on the Persian Gulf south of Kangan.[ Iran is able to produce all the parts needed for its gas refineries. Iran is now the third country in the world to have developed ]gas to liquids
Gas to liquids (GTL) is a refinery process to convert natural gas or other gaseous hydrocarbons into longer-chain hydrocarbons, such as gasoline or diesel fuel. Methane-rich gases are converted into liquid synthetic fuels. Two general strategies ex ...
(GTL) technology.
In the 1980s, Iran began to replace oil, coal, charcoal, and other fossil-fuel energy sources with natural gas, which is environmentally safer. The share of natural gas in household energy consumption, which averaged 54 percent in 2004, was projected to increase to 69 percent by 2009. Overall, natural gas consumption in Iran was expected to grow by more than 10 percent per annum between 2005 and 2009.[
With international ]oil price
The price of oil, or the oil price, generally refers to the spot price of a barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC Ref ...
s increasing and projected to continue increasing, international demand for natural gas and investment in production and transportation of natural gas to consumer markets both increased in the early 2000s. Iran set a goal of increasing its natural gas production capacity to 300 billion cubic meters by 2015 while keeping oil production stable. To achieve this capacity, the government has planned a joint investment worth US$100 billion in the oil and gas industry through 2015.
Market value of Iran's total natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
reserves at comparative international energy price of $75 per barrel of oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
stands at ~US $4 trillion. Following the discovery of a large gas deposit in the Caspian sea (The ''Sardar Jangal'' gas field) in 2011 estimated at 50 trillion cubic feet (some 1.4 trillion cubic meters), Iran could rank first in the world in terms of gas reserves. In addition, Iranian media
The mass media in Iran are privately and publicly owned but is Censorship in Iran, subject to censorship. As of 2016, Iran had Iranian newspapers, 178 newspapers, List of Iranian magazines, 83 magazines, 15,000 information sites and Iranian blogs, ...
have reported in 2012 the discovery of gas field "as big as South Pars gas field
The South Pars/North Dome field is a natural-gas condensate field located in the Persian Gulf. It is by far the world's largest natural gas field, IEA, World Energy Outlook 2008 - Chapter 12 - Natural gas resources and production prospects, p.298 ...
" in the oil-rich Khuzestan province
Khuzestan Province (also spelled Xuzestan; fa, استان خوزستان ''Ostān-e Xūzestān'') is one of the 31 provinces of Iran. It is in the southwest of the country, bordering Iraq and the Persian Gulf. Its capital is Ahvaz and it covers ...
. In 2011, Iran signed a contract with Baghdad and Damascus in order to export Iran's gas to Iraq
Iraq,; ku, عێراق, translit=Êraq officially the Republic of Iraq, '; ku, کۆماری عێراق, translit=Komarî Êraq is a country in Western Asia. It is bordered by Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq ...
, Syria
Syria ( ar, سُورِيَا or سُورِيَة, translit=Sūriyā), officially the Syrian Arab Republic ( ar, الجمهورية العربية السورية, al-Jumhūrīyah al-ʻArabīyah as-Sūrīyah), is a Western Asian country loc ...
, Lebanon
Lebanon ( , ar, لُبْنَان, translit=lubnān, ), officially the Republic of Lebanon () or the Lebanese Republic, is a country in Western Asia. It is located between Syria to the north and east and Israel to the south, while Cyprus li ...
, the Mediterranean region and eventually Europe. Oman
Oman ( ; ar, عُمَان ' ), officially the Sultanate of Oman ( ar, سلْطنةُ عُمان ), is an Arabian country located in southwestern Asia. It is situated on the southeastern coast of the Arabian Peninsula, and spans the mouth of t ...
and Kuwait
Kuwait (; ar, الكويت ', or ), officially the State of Kuwait ( ar, دولة الكويت '), is a country in Western Asia. It is situated in the northern edge of Eastern Arabia at the tip of the Persian Gulf, bordering Iraq to the nort ...
were negotiating an import agreement in 2014. Once all pipelines become operational, Iran can potentially export a total of more than 200 million cubic meter of natural gas every year to Iraq, India, Pakistan, and Oman.
Major foreign projects
In 2004 Iran signed a contract with France and Malaysia for production and export of natural gas and another agreement with European and Asian companies for expansion and marketing of its natural gas resources. In 2005 Iran exported natural gas to Turkey
Turkey ( tr, Türkiye ), officially the Republic of Türkiye ( tr, Türkiye Cumhuriyeti, links=no ), is a list of transcontinental countries, transcontinental country located mainly on the Anatolia, Anatolian Peninsula in Western Asia, with ...
and was expected to expand its market to Armenia, China, Japan, other East Asian countries, India, Pakistan, and Europe. The first section of a new line to Armenia opened in spring 2007, as a much-discussed major pipeline to India and Pakistan remained in the negotiation stage.[
Among some more recent deals, Switzerland's energy company EGL, signed a 25-year LNG export deal with Iran's National Iranian Gas Export Company on March 17, 2007, reportedly valued at 18 billion. ]Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
will buy 5.5 billion cubic meters of Iranian natural gas each year, beginning in 2011. In April 2007, OMV
OMV (formerly abbreviation for Österreichische Mineralölverwaltung Aktiengesellschaft ('' en, Austrian Mineral Oil Administration Stock Company'')) is an Austrian multinational integrated oil, gas and petrochemical company which is headquart ...
, the Austria
Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
n partially state-owned energy company, signed letters of intent with Iran, worth an estimated $22.8 billion (22 billion euros), for Iran to supply Europe with gas. The United States has expressed strong opposition to both the Swiss and Austrian deals with Iran.
The National Iranian Gas Company
The National Iranian Gas Company (NIGC) was established in 1965 as one of the four principal company, companies affiliated to the Ministry of Petroleum of Iran, Ministry of Petroleum of the Islamic Republic of Iran with 25,000 million Iranian ...
(NIGC) is expected to finalize a natural gas export deal with Pakistan
Pakistan ( ur, ), officially the Islamic Republic of Pakistan ( ur, , label=none), is a country in South Asia. It is the world's List of countries and dependencies by population, fifth-most populous country, with a population of almost 24 ...
, with exports set to begin in 2011. The gas would be transported through a " Peace pipeline", worth about $7.4 billion. The plan initially also included exporting gas to India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
, but negotiations have stalled over pricing. Iran also is discussing a gas production and export deal with Turkey
Turkey ( tr, Türkiye ), officially the Republic of Türkiye ( tr, Türkiye Cumhuriyeti, links=no ), is a list of transcontinental countries, transcontinental country located mainly on the Anatolia, Anatolian Peninsula in Western Asia, with ...
. Under the plan, Turkey would assist in developing Iran's South Pars field in exchange for cash or natural gas. Gas would be shipped from Iran to Turkey and Europe via a new pipeline that Turkey plans to build.
Other notable petroleum sector development deals include those with Russia
Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
and China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
. On February 19, 2008, Russian state gas company Gazprom
PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the larges ...
announced a deal to establish a joint venture company to develop the offshore Iranian South Pars gas field
The South Pars/North Dome field is a natural-gas condensate field located in the Persian Gulf. It is by far the world's largest natural gas field, IEA, World Energy Outlook 2008 - Chapter 12 - Natural gas resources and production prospects, p.298 ...
. A China National Offshore Oil Corporation
China National Offshore Oil Corporation, or CNOOC Group (Chinese: 中国海洋石油总公司 Pinyin: ''Zhōngguó Háiyáng Shíyóu Zǒnggōngsī''), is one of the largest national oil companies in China, and the third-largest national oil c ...
(CNOOC) investment deal, valued at $16 billion, to develop Iran's North Pars
North Pars Gas Field ( fa, میدان گازی پارس شمالی) is one of the biggest independent gas fields of the world. This field which was discovered in 1967 is located some 120 kilometers south east of Bushehr province in water depths o ...
gas field and to build a liquid natural gas
Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled down to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the vol ...
(LNG) plant, was supposed to be signed on February 27, 2008 but has been delayed. The state-operated National Iranian Oil Company (NIOC) and CNOOC signed a memorandum of understanding in December 2006 for the project, under which CNOOC would purchase 10 million metric tons per year of LNG for 25 years.
Petrochemicals
In the early 2000s, an ambitious state petrochemicals
Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
project called for expansion of annual output in that industry from 9 million tons in 2001 to 100 million tons in 2015. Output capacity in 2006 was estimated at 15 million tons. The goal of this expansion is to increase the percentage of Iran's processed petroleum-based exports, which are more profitable than raw materials. In 2005 Iran exported US$1.8 billion of petrochemical products (about one-third of total nonoil exports in that year). Receiving 30 percent of Iran's petrochemical exports between them, China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
and India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
were the major trading partners in this industry. Iran's domestic resource base gives it a unique comparative advantage in producing petrochemicals when international crude oil prices rise. The gain has been greatest in those plants that use liquid gas as their main input. For FY 2006, the petrochemical industry's share of GDP was projected to be about 2 percent. Iran plans to invest a total of $500 billion in the oil sector before 2025.
Iran's petrochemical industries have absorbed a large amount of private and public investment. In the early 2000s, 43 percent of these investments was financed by Iran's National Petrochemical Company, a subsidiary of the Ministry of Petroleum, which administers the entire petrochemical sector. Another 53 percent is owned by foreign creditors (more than 100 foreign banks and foreign companies), 3 percent by banks, and 1 percent by the capital market. Most of the petrochemical industry's physical capital is imported, and the industry does not have strong backward linkages to manufacturing industries. In 2006 new petrochemical plants came online at Marun and Asaluyeh
Asalouyeh ( fa, عسلويه, also Romanized as 'Asalūyeh; also known as Asalu, and sometimes prefixed by bandar, meaning port) is a city and capital of Asaluyeh County, in Bushehr Province, Iran. At the 2006 census, its population was 4,746, ...
, and construction began on three others.[ Iran National Petrochemical Company's output capacity will increase to over 100 million tpa by 2015 from an estimated 50 million tpa in 2010 thus becoming the world' second largest chemical producer globally after Dow Chemical with Iran housing some of the world's largest chemical complexes.]
See also
*Energy in Iran
Iran has the fourth largest oil reserves and the 2nd largest natural gas reserves in the world. The nation is a member of OPEC, and generates approximately 50% of state revenue through oil exports.
Most energy in Iran is generated through ...
*Economy of Iran
The economy of Iran is a mixed economy with a large state-owned sector and is the largest in the Middle East in terms of nominal GDP. It is the world's 21st largest by purchasing power parity (PPP). Some 60% of Iran's economy is centrally pla ...
*Industry of Iran
According to a report by ''The Economist'', Iran has been ranked 39th for producing $23 billion of industrial products in 2008. From 2008 to 2009 Iran has leaped to 28th place from 69th place in annual industrial production growth rate.
T ...
*Iranian Oil Bourse
The Iranian Oil Bourse ( fa, بورس نفت ایران), International Oil Bourse, Iran Petroleum Exchange Kish Exchange or Oil Bourse in Kish (IOB; the official English language name is unclear) also known as Iran Crude Oil Exchange, is a commod ...
*Ministry of Petroleum of Iran
The Ministry of Petroleum (MOP) ( fa, وزارت نفت, Vezârat-e Naft) manages the oil industry, the producer of oil and petrochemical products. MoP is in charge of all issues pertaining to exploration, extraction, exploitation, distributio ...
*National Iranian Oil Company
The National Iranian Oil Company (NIOC; fa, شرکت ملّی نفت ایران, Sherkat-e Melli-ye Naft-e Īrān) is a government-owned national oil and natural gas producer and distributor under the direction of the Ministry of Petroleum of ...
*National Iranian Oil Refining and Distribution Company
National Iranian Oil Refining and Distribution Company (NIORDC) is part of the Ministry of Petroleum of Iran. NIORDC was established on 8 March 1991 and undertook to perform all operations relating to refining and distribution of oil products.
Al ...
*National Iranian Petrochemical Company
The National Petrochemical Company (NPC) ( fa, شرکت ملی صنایع پتروشیمی, ''Shirkat-e Mili-ye Sânai'-ye Petrushimiy''), a subsidiary to the Iranian Petroleum Ministry, is owned by the government of the Islamic Republic of Iran. ...
*National Iranian Gas Company
The National Iranian Gas Company (NIGC) was established in 1965 as one of the four principal company, companies affiliated to the Ministry of Petroleum of Iran, Ministry of Petroleum of the Islamic Republic of Iran with 25,000 million Iranian ...
*Tehran Stock Exchange
The Tehran Stock Exchange (TSE) ( fa, بورس اوراق بهادار تهران, romanized: ''Burs-e Owraq-e Bahadar-e Tehran'') is Iran's largest stock exchange, which first opened in 1967. The TSE is based in Tehran. , 339 companies with a com ...
*Iranian targeted subsidy plan
The economy of Iran includes a lot of subsidies. Food items, such as flour and cooking oil, are subsidized, along with fuels such as gasoline. However cutting subsidies can cause civil unrest.
The Iranian targeted subsidy plan ( fa, طرح هدف ...
References
External links
Ministry of Petroleum Of Iran Official Website
Ministry of Energy Of Iran Official Website
US Department of Energy
- Iran's entry
SHANA - Official News Service for Oil and Gas in Iran
- 2003 Study (history, market overview, domestic suppliers, major projects, buy-backs)
FACTBOX-Iran's crude export and fuel import customers
- Reuters
Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world.
The agency was estab ...
Offshore Middle East and Caspian Sea Oil and Gas Market Report 2011
Iran Gas Markets Report, 2011
- GlobalData
Iran's oil exportation map by country
- Reuters
Infrastructure map of Iran's fields and facilities
Persia Land of Black Gold
Iranian Discoveries Continue
{{DEFAULTSORT:Petroleum Industry In Iran