South Pars Gas Field is a major driving force behind Iran's economy, but the global energy market is rapidly shifting focus toward renewable sources, a top Iranian economist says.
Developing South Pars—the world's biggest gas field shared between Iran and Qatar—"can bring in $100 billion in annual revenues" which would spur investment in other sectors, Jamshid Pajouyan, a member of the academic board of Allameh Tabatabaei University, told Shana in an interview.
"Investment in this joint field is more important than in any other industry … in order to match our neighboring rival's output in the shortest possible time."
But he cautioned it is a matter of time before renewable and cleaner energy sources, such as wind and solar, dethrone the struggling fossil fuel industry. "Mass production of renewable equipment and appliances would significantly cut costs and this will drive out fossil fuel-burning cars and equipment," he said.
"The world is rapidly moving toward renewable energies such as solar. Let's not forget billions of tons of coal left unused in European countries because of its pollution and high costs of extraction. This may also happen to our oil reserves."
Pajouyan said Saudi Arabia, the top producer of the Organization of Petroleum Exporting Countries, and non-OPEC Russia are the hardest hit by the slump in crude prices.
He stressed that the two states are pumping at record highs to "make the most of their oil reserves as fast as possible" before the global initiative to boost renewables gathers steam in the next few years.
Riyadh posted a whopping $100 billion budget deficit for 2015. International Monetary Fund warned last year the kingdom could exhaust all of its financial assets in five years if it persists on its current economic policies, notably its pump-at-any-price strategy that has sent prices tumbling to $30 a barrel from a $115-a-barrel high in mid-2014.
Russia's Deputy Finance Minister Maxim Oreshkin said in December the country's budget deficit could reach $21.7 billion in 2016 with an oil price baseline of $40 a barrel.
Iran's oil-dependent economy is not immune to oil fluctuations as well despite sitting on the world's biggest natural gas reserve and the fourth-largest crude oil reserve. The country has lived on oil revenues for far too long and its gas-driven petrochemical industry is its second biggest source of income after petrodollars.
According to a deputy energy minister, only a meager 6% of Iran's electric output comes from renewables.
Data show nominal power generation capacity stands at around 74,000 megawatts, with 61,000 MW coming from thermal power plants, 12,000 MW from hydroelectric plants and 1,000 MW from nuclear power plants.
However, renewables generate no more than a few hundred megawatts of electricity in a country of diverse climate with more than 300 sunny days and vast windy lands.
