Energy Policy in Iran: Domestic Choices and International Implications

By Bijan Mossavar-Rahmani

Energy Policy in Iran: Domestic Choices and International Implications presents the assessment of energy demand patterns; evaluation of major energy supply; and recommendation of policies and guidelines for an integrated energy plan for Iran. This text is comprised of 11 chapters; the opening chapter discusses Iran in an international setting. Chapter 2 covers the economic framework for long-range policy, while Chapter 3 discusses the historical pattern. The fourth chapter discusses energy demand projections and the succeeding chapter covers energy sources and strategies, such as oil, natural gas, hydropower, solid and miscellaneous fuels, electricity, and nuclear power. The last chapter covers petrochemicals. This book will be of great interest to readers who are concerned with Iran's energy policies and its implications.

• Language: English
• Publisher: Elsevier Science
• Release date: Oct 22, 2013
• ISBN: 9781483148229

Book preview

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Introduction

Wherever you dig in Iran, it has been said, if you don’t strike oil, you will at least uncover ancient history. Sometimes you strike both in the same place.

So it was that the first discovery in 1908 of oil in commercial quantities in the Middle East was in the shadow of the Masjid-i-Suleiman fire temple, one of dozens of Zoroastrian fire temples scattered about Iran that used flared natural gas seepages in religious ceremonies.

The first recorded oil well was in ancient Iran and the first recorded oil tax was levied there. Over two thousand years ago, uses had been found for oil and a crude refining method was designed. Oil was drawn out of shallow wells and hauled away in goatskin bags, and the refining process yielded three products: salt, bitumen, and oil. The bitumen was used in binding bricks and other construction work, caulking ships, waterproofing pottery, and even as an adhesive for setting jewelry. The oil was used as fuel for lamps and for medicinal purposes; it was believed to be particularly effective in curing camels of mange. Armies used it in defense battlements, boiling it in cauldrons and pouring it on attacking troops, or using it for flaming arrow tips.

Thus oil, even then, was of value to virtually every segment of society although on a scale so comparatively small that today more oil is used in minutes than in the several preceding centuries. An important part of this oil, now as then, derives from Iran’s vast reservoirs.

Before the Islamic revolution of 1978–79, Iran was producing an average of 5.5 million barrels per day (b/d) of oil, or over 10 percent of the world total, and exporting all but the 500,000 b/d that were consumed internally. Iran thus ranked as the world’s fourth largest producer of oil (after the Soviet Union, the United States, and Saudi Arabia) and the second largest exporter after Saudi Arabia.

By mid-1981, however, Iran’s oil output had dropped to an estimated 1.4 million b/d as a consequence of the continuing revolutionary turmoil and the border war with Iraq, and in all likelihood the country will be unwilling and perhaps unable in the near future to return to its previous production levels. At the same time, domestic consumption of oil products is expected to increase rapidly once the political situation stabilizes and the economy recovers, further reducing the availability of oil for export purposes. Indeed, by the 1990s Iran may export no more than a million barrels per day unless it can develop non-oil energy supplies, increase oil production from existing fields, and develop new ones. Yet the required massive investment and large number of foreign technicians may preclude the effort.

In examining Iran’s domestic energy options and strategies and their international implications, this book begins by looking at how domestic energy strategies–in the oil, natural gas, and nuclear power sectors, for example–will affect not only Iran’s own course of development but the world energy regime generally.

Then attention is drawn to Iran’s domestic energy requirements. Historical patterns of demand by fuel and end-use are reviewed before turning to consider Iran’s likely future needs vis-a-vis its anticipated economic growth.

While comprehensive information on the post-revolution performance of the economy generally, and on developments in the energy sector specifically, is not yet available, it is clear that the turmoil in Iran has led to a slowing down of economic growth beginning in the latter part of 1978 and continuing into 1981. Correspondingly, energy demand, which is very sensitive to economic growth, has not increased as rapidly as had been projected earlier, and new construction projects and facilities are behind schedule. Yet the thrust and direction of pre-revolution projections of energy demand–the only detailed ones currently available–remain more or less unchanged; one of the two projections of future energy demand used in this book is a revised version of an earlier forecast, modified to reflect, as well as possible under the circumstances, the changes that have taken place in Iran’s energy sector during the last three