Tapping into the huge offshore and onshore oil and gas reserves to ensure energy security requires not only massive investment, but also cutting-edge technology, neither of which is available in Iran, an energy expert said.
“Not being able to attract foreign investment is a recipe for disaster and the only way to convince international giants to finance upstream and downstream initiatives in Iran is by developing friendly relations with the world,” Morteza Behrouzifar also told ILNA.
The implementation of development plans in hydrocarbon reserves needs an investment of at least $300 billion. Pinning hope on domestic banks and companies to fund mega projects is unrealistic, as most of them have long been struggling to survive, he added.
The energy expert noted that as long as sanctions remain in place and foreign investors are not given a reliable guarantee and do not feel economically safe, they will never risk losing their money.
“Economic and political challenges are intertwined and the former cannot be handled effectively unless the latter is resolved peacefully,” he said.
In other words, international energy majors' unwillingness to play a role in Iran’s energy plans will persist, if the country cannot establish cordial relations with the global community.
Underscoring the significance of acquiring the knowhow for expanding offshore fields, Behrouzifar said Iranian experts have been working on onshore hydrocarbon reserves for a century, yet there is still a long way to go regarding deep-water operations.
"Domestic producers are already producing a broad range of petroleum products, but the country lacks state-of-the-art knowhow and new equipment to diversify its commodities."
Largest Gas Reserves
It is regrettable that the holder of the second largest natural gas reserves in the globe desperately strives to deliver the fuel to its people and what is worse is that the situation will get worse as time passes because officials have no plan to develop infrastructures due to financial constraints.
Iran has close to 34 trillion cubic meters of natural gas reserves – about 18% of the total global gas reserves.
It is beyond doubt that the National Iranian Oil Company will import gas in the years to come, as local consumption is rising while supply is not expected to change, not at least for the next five years.
“If NIOC cannot sell its products with ease and cannot expand its output and market share steadily, there will be no money to import gas. As a result, the size of the economy will keep shrinking,” the energy expert said.
Referring to the giant South Pars Gas Field, Behrouzifar noted that despite peak production in the field off the Persian Gulf, pressure reduction has emerged gradually and could get worse unless hi-tech offshore compressor stations are installed.
According to Ali Majedi, a former deputy oil minister for international and commercial affairs, encouraging foreign investment needs constructive interactions with the world, which can lead to higher natural gas production and export capacity.
The ex-official said it is impossible to be in conflict with half the world and at the same time ask international oil and gas giants to invest in domestic ventures.
“So, the nuclear deal’s critics should explain how they expect the country to bring in foreign investment without having good ties with other states," he said, referring to the historic nuclear agreement signed between Tehran and the six major world powers in 2015 when some of the international sanctions, imposed over Tehran’s nuclear activities, were lifted.
"For us to raise the current gas export capacity of 50 million cubic meters per day, we need to attract investment from the private sector as well as foreign investors," he added.
Underperforming Economy
According to the official, the best way to stimulate the underperforming economy is by promoting investment which, in turn, requires engagement with the world.
Majedi said Iran has never been a major player in the international gas market due to its controversial political decisions that have made foreign firms lose interest in funding domestic projects.
On the other hand, all those multinational firms have been developing oil and gas fields in Iran’s tiny Arab neighbor Qatar because of which it operates 14 LNG trains with a total annual production capacity of over 80 million tons.
Noting that Iran is still deprived of the technology to produce LNG, he said without an efficient foreign policy, it would be impossible to develop the economy as foreign investment is an indispensable part of economic growth, financial systems and cooperation with international bodies.
“No country is known to have successfully developed its economy by adopting an adventurist foreign policy. Countries such as China and India did not begin making economic progress until they put the foreign policy at the service of economic development,” he added.
