1、IranLast Updated: November 2011Backgro undIran holds the world ' SatgeSh proven oil reserves and theworld ' s secohorgest natural gasreserves.Intern ati onalsan cti ons andunfav orable inv estme nt terms,however, haveimpeded developme nts across the en ergy sector.Ira n, a member of the Orga

2、 ni zati onof the Petroleum Exporting Countries (OPEC, ranks among the world' s top four holdersof both prove n oil and n atural gas reserves. In 2010, Ira n was the third-largest exporter ofcrude oil globally after Saudi Arabia and Russia. However, falling production andin creases in domestic c

3、on sumptio n will con ti nue to squeeze the volumes of oil available for export in rece nt years.Iran has the world ' s second largest natural gas reserves but the sector is underdeveloped and used mostly to meet domestic dema nd. Natural gas acco unts for 54perce nt of Iran ' s total domest

4、ic en ergy con sumpti on. Most of the rema in der of en ergy consumption is attributable to oil, with marginal contributions from coal and hydropower.Iran is expected to in crease n atural gas product ion from its offshore South Pars n aturalgas field in the Persian Gulf, an integral component of en

5、ergy sector expansion plans.Intern ati onal sanctions en acted in the summer of 2010 have slowed progress across the en ergy sector, especially affect ing upstream in vestme nt in both oil and n atural gas projects. The Un ited States, Un ited Nati ons, the Europea n Union, and a nu mber of Europea

6、n and Asia n coun tries have targeted the Iranian en ergy sector with sanctions of vary ing degrees of stri ngency. These have prompted a nu mber of intern ati onal en ergy compa nies to pull out of upstream projects. San cti ons have also impeded the import of refined products, prompti ng efforts t

7、o boost domestic producti on and curb rising dema nd in Iran.The Strait of Hormuz, on the southeastern coast of Iran, is an important route for oil exports from Iran and other Persian Gulf countries. At its narrowest point the Strait of Hormuz is 21 miles wide, yet an estimated 17 millio n bbl/d flo

8、wed through it in 2011 (35 perce nt of all seabor ne traded oil and 20 perce nt of oil traded world-wide. In additi on to oil, liquefied natural gas (LNG volumes also flow through the Strait. In total, about 70 million tons of LNG flowed through the Straitbetween Jan uary and October 2011. OilIran i

9、s OPEC ' s sedorgtest oilproducer and the third-largest crude oil exporter in the world. Accord ing to Oil & Gas Journal, as of January 2011, Iran has an estimated 137 billion barrels of proven oil reserves, 9.3 perce nt of the world's total reserves and over 12 perce nt of OPEC reserves

10、. In July 2011, OPEC released its 2010 Annual Statistical Bulletin which raised Iran proven reserves to more than 151 billion barrels of crude. Some analysts are skeptical of this estimate, however, as Iran revised its reserves a week after Iraq had revised its own, leadi ng some to speculate the mo

11、ve was political.Over 50 perce nt of reserves are confined to six supergia nt fields. Of those on shore reserves, 85 perce nt are located in the southwester n Khuzesta n Basi n n ear the Iraqi border. Ira n's crude oil is gen erally medium in sulfur content and in the 28-35 °API ran ge. Ira

12、 n faces continued depletio n of its product ion capacity, as its fields have relatively high natural decline rates (8-13 percent, coupled with an already low recovery rate of around 20-30 perce nt. Sanctions and prohibitive con tractual terms have impeded the necessary investment to halt this decli

13、ne.Sector Orga ni zati onThe state-owned National Iranian Oil Company (NIOC, under the supervision of the Ministry of Petroleum, is responsible for all upstream oil projects, encompassing both product ion and export in frastructure. The Nati onal Iranian South Oil Compa ny (NISOC, a subsidiary of NI

14、OC, acco unts for 80 perce nt of oil producti on coveri ng the provin ces of Khuzesta n, Bushehr, Fars, and Kohkiluyeh and BoyerAhmad. Nomin ally, NIOC also controls the refining and domestic distribution networks, by way of its subsidiary, the National Iranian Oil Refining and Distribution Company

15、(NIORDC, although fun ctio nally there is a separati on betwee n the upstream and dow nstream sectors.The Iranian constitution prohibits foreign or private ownership of natural resources. The gover nment permits buyback con tracts that allow intern ati onal oil compa nies (IOCs to en ter into explor

16、ati on and developme nt con tracts through an Iranian affiliate. The con tractor receives a rem un erati on fee, usually an en titleme nt to oil or gas from the developed operati on, leav ing the con tractor to provide the n ecessary capital up-fr ont. Once developme nt of a certa in field is comple

17、te, however, operatorship reverts back to NIOC or the releva nt subsidiary.Explorati on and Productio nIran is OPEC ' s sedorgtest producer after Saudi Arabia. In 2010, Iran produced approximately 4 million barrels (bbl of total liquids per day, of which roughly 3.7 million bbl/d was crude oil,

18、equal to about 5 perce nt of global product ion. Thus far in 2011, it is estimated that Iran ' s crude production has been approxim3i.6yr13i6on bbl/d, still above its former OPEC product ion target of 3.34 millio n bbl/d. Ira n has 40 produc ingfields (27 on shore and 13 offshore, with on shore

19、fields compris ing 71 perce nt of totalreserves.Curre ntly, Ira ns largest produc ing field isthe on shore Ahvaz field, followed by the Maroun field, both located in Khuzesta n provin ce.As of the June 2011 OPEC meeting, however, the production target system has been ack no wledged as irreleva nt, s

20、ince no formal agreeme nt on producti on levels could be reached. Saudi Arabia had proposed an in crease of 1.5 milli on bbl/d, but Iran in particular spearheaded an effort to block such an in crease, leav ing Saudi Arabia, Kuwait, and the Un ited Arab Emirates to boost producti on in depe nden tly.

21、Si nee the 1970s, Ira n' s product ion hogreatlysdlra n averaged product ion ofover 5.5 million bbl/d of oil in 1976 and 1977, with production topping 6 million bbl/d for much of the period. Si nce the 1979 revoluti on, however, a comb in ati on of war, limited investment, sanctions, and a high

22、rate bnatural decline in Iran' s mature oil fieldshave preve nted a return to such production levels. An estimated 400,000-700,000 bbl/d of crude production is lost annually due to declines in the mature oil fields. To offset natural decli ne rates, Ira ni6lds oOcfuire structural upgrades in clu

23、di ng enhan ced oil recovery(EOR tech niq ues such as n atural gas injectio n, which has put eve n greater strain on en ergy supply due to rising dema nd for n atural gas domestically.Iran ' s reserves are not confined feostbuthwest and offshore Persian Gulf, creating pote ntial for further disc

24、overies. Ira nian has oil reserves un der the Caspia n Sea, but exploration and development of these reserves have been at a standstill due to territorial disputes with n eighbori ng Azerbaija n and Turkme ni sta n. Ira n also shares a nu mber of both on shore and offshore fields with n eighbori ng

25、coun tries, in clud ing Iraq, Qatar, Kuwait, and Saudi Arabia.There were a nu mber of new discoveries in Iran over the past couple of years. In May 2011, NIOC ann ou need a discovery of a deposit of light oil (35 API gravity in the Khayyam field, offshore in the Hormuzgan province. The field had bee

26、n discovered in2010 but was originally classified as a gas field. According to the NIOC, the volume of in-place oil at this field is 758 million barrels, of which around 170 million barrels are recoverable. Also in May 2011, Ira n announ ced the discovery of new on shore oil fields in its south and

27、west with an estimated half a billion barrels of reserves. In late 2010, Iran claimed the discovery of new crude finds near gas reservoirs in the Persian Gulf, holding total in-place reserves of more tha n 40 billi on barrels of oil, however recoverable reserves could be less tha n 10 billi on barre

28、ls.Upstream ProjectsThere are few upstream oil projects in developme nt, and those that are proceed ing have bee n slowed by the loss of expertise, tech no logy and funding in the wake of various sanctions. The most promis ing prospects for a boost in producti on capacity comes from two specific pro

29、jects: Azadega n and Yadavara n. Other curre nt oil projects in clude Jofeir, Resalat, and Forouza n, all of which have bee n sig nifica ntly delayed due to san cti ons.The Azadegan field was Iran' s biggest oil find in 30 years when announced in 1999.It contains 26 billion barrels of proven cru

30、de oil reserves, but its geologic complexity makes extraction difficult. The field is separated into two portions: North and South Azadega n. Chi na Nati onal PetroleumCorporati on (CNPC is develop ing North Azadega n in a two-phase developme nt with ultimate total production estimated at 150,000 bb

31、l/d (75,000 bbl/d for each phase.In 2004, a consortium of NIOC (25 percent and Japan' s INPEX (75 percent signedan agreeme nt for developme nt of the souther n porti on of the Azadega n field. In 2006, INPEX lowered its stake to 10 percent and following growing pressure in the wake of sanctions

32、last year; it pulled out of the project completely in October 2010. In September 2009, a subsidiary of CNPC, China National Petroleum Corporation InternationalLimited (CNPCI, signed a memorandum of understanding (MOU with NIOC to develop South Azadega n in two phases.Yadavara n is the other promisi

33、ng upstream oil developme nt project. Chi na Petroleum & Chemical Corporati on (Si nopec sig ned a buyback con tract at the end of 2007 to develop Yadavara n in two phases. The first will produce at a plateau of 85,000 bbl/d (by 2014, while the seco nd will boost production to 185,000 bbl/d by 2

34、016.Over the past year, a nu mber of new explorati on projects have bee n un dertake n and completed. The completed explorati on projects in clude the Anaran Block, which con sists of two large oil fields, Changooleh and Azar (expected to produce 67,000 bbl/d and 68,000 bbl/d, respectively .In addit

35、i on, explorati on projects in the Koohdasht, Garmsar, and Tousa n Blocks have bee n completed, with disappo inting results. Some of the explorati on projects resulted in no successful gas an d/or oil discoveries. Overall, according to FACTS Global Energy (FGE , Iran' s discoveries an crude oico

36、n de nsates totaled 10.7 billio n barrels in 2010.ExportsIn 2010, Ira n exported approximately 2.2 milli on bbl/d of crude oil. Ira nian Heavy Crude Oil is Iran ' s largest crude export followed by Iranian Light. In 2010, Iran export reve nues anoun ted to approximately $73 billio n. Oil exports

37、 provide half of Iran government revenues, while crude oil and its derivatives account for nearly 80 percent of Iran ' s total exports.Source: Global Trade Atlas, U.S. Energy Information AdministrationData through the end of June 2011 show that Iranian exports are on track to remain over 2.2 mil

38、lion bbl/d, should exports continue at the same pace for the second half of the year. Based on the 6-m on th data, Chi na, I ndia, South Korea, and Turkey have in creased their imports of Iranian crude oil thus far this year, as crude oil volumes are reallocated to the coun tries that have imposed l

39、ess stri ngen t san cti ons on them. At the same time, export volumes to Italy and the UK have decreased at least in part due to sanctions imposed on the Iranian en ergy sector.Source: Global Trade Atlas, APEXIran ' s oil exports also have been affected by sanctions. In 2011, Iran experieneed si

40、g nifica nt problems with recei ving payme nts from In dia for its exports, whe n the Reserve Bank of India halted a clearing mechanism due to sanctions. Some of the payme nts have bee n cleared through Turkish and UAE ban ks. More rece ntly, NIOC announ ced that In dia has cleared all oil debts to

41、Iran through Gazpromba nk of Russia and Iran has already received all overdue payme nts for its exports to In dia.Export Term in alsKharg Island, the site of the vast majority of Iran' s exports, has a crude storagecapacity of 20.2 million barrels of oil and a loading capacity of 5 million bbl/d

42、. Lavan Isla nd is the sec on d-largest termi nal with capacity to store 5 millio n barrels and load ing capacity of 200,000 bbl/d. Other important terminals include Kish Island, Abadan, Bandar Mahshar, and Neka (which helps facilitate imports from the Caspian region.Con sumpti on and Down streamIra

43、n is the sec on d-largest oil consuming country in the Middle East, sec ond only toSaudi Arabia. Ira nian domestic oil dema nd is mainly for diesel and gasoli ne. Total oil con sumptio n was approximately 1.8 milli on bbl/d in 2010, about 10 perce nt higher tha n the year before. Ira n has limited r

44、efi nery capacity for the product ion of light fuels, and consequently imports a sizeable share of its gasoline supply. Iran' s total refinery capin January 2011 was about 1.5 million bbl/d, with its nine refineries operated by theNational Iranian Oil Refining and Distribution Company (NIORDC, a

45、 NIOC subsidiary.The Iranian gover nment subsidizes the price of refi ned oil products, however price reforms in stituted in December 2010 removed some of the subsidies, which sig nifica ntly affected gasoli ne con sumpti on in Iran (see Gasoli ne sect ion below. Ira n is an overall net petroleum pr

46、oducts exporter due to large exports of residual fuel oil.Iran has had other difficulties with refinery capacity expansion recently. During thein augurati on cerem ony (led by Iran' s preside nt Mahmoud Ahmadi nejad of the Abada nrefinery expansion, a gasoline unit blew up as a result of a gas l

47、eak. It took NIORDC four mon ths to rebuild the unit and bring it on li ne.Fi nally, Ira n pla ns to in crease refi ning capacity with the aim to become self- sufficie nt for gasoli ne. Plans for capacity in creases through expa nsions at exist ing refin eries as well as pla nnedgree nfield refi ner

48、y con structi on have bee n announ ced. Ira n has issued permits to con struct six new refi neries with a comb ined refi ning capacity of 1.2 millio n bbl/d, however there has bee n little progress because of financing difficulties.Source: Oil and Gas Jour nal, January 2011Gasoli neSanctions imposed

49、 on Iran have made it difficult for the country to import needed volumes of gasoli ne. The gover nment has attempted to con trol con sumpti on by impleme nti ng accelerated subsidy reform, result ing in a sharp in crease in the price of gasoline. The subsidy reform spurred political opposition becau

50、se of inflationary fears in the midst of an econo mic dow nturn. Furthermore, petrochemical pla nts were conv erted so that they can produce gasoli ne as a short-term measure. However, the con verted pla nts produce low quality gasoli ne, caus ing sig nifica nt en vir onmen tal problems.In 2010, Ira

51、 n con sumed around 400,000 bbl/d of gasoli ne, about 4 perce nt less tha n consumed in 2009. Iran does not currently have sufficient refining capacity to meet its domestic gasoli ne and other light fuel n eeds. However, the gover nment has approved a number of expansions of existing as well as cons

52、truction of new refineries with the aim to make Iran self-sufficie nt (and an exporter of gasoli ne.Iranian gasoli ne imports were approximately 78,000 bbl/d in 2010, n early 70 perce nt of total product imports. Current and proposed expa nsions of Iranian refi neries likely will come on li ne betwe

53、e n 2012 and 2017. Ira n is expected to rema in a gasoli ne importer n ext year, however if proposed expansions occur as planned, it is possible the country will become a gasoli ne exporter in 2015.Rati oning and SubsidiesIran ' s energy sector is characterized by inefficiency and the government

54、 heavily subsidizes en ergy prices, particularly gasoli ne. Since December 2010, private motorists pay approximately 40 cents per liter for the mon thly quota of 60 liters and about 70 cents per liter on the market, according to FGE. These prices are significantly higher than the previous price of 1

55、0 cents per liter that motorists paid between December 2009 and December 2010. Furthermore, the gover nmen t lowered the allowa nee from 100 liters to 60 liters per mon th.U.S. SanctionsAs per the Iran Transactions Regulations, administered by the U.S. Department of Treasury ' s Office of Foreig

56、n Assets Control (OFAC, U.S. sons may not directly or in directly trade, finan ce, or facilitate any goods, services or tech no logy going to or from Iran, in cludi ng goods, services or tech no logy that would ben efit the Iranian oil in dustry. U.S. pers ons are also prohibited from en teri ng int

57、o or appro ving any con tract that in cludes the supervisi on, man ageme nt or financing of the developme nt of petroleum resources located in Iran. See OFAC' s Iran Transactions Regulations page for morein formatio n.Pipeli nesIran has an expa nsive domestic oil n etwork in clud ing more tha n

58、10 pipeli nes that run between 63 and 630 miles in length. Iran has invested in its import capacity at theCaspia n port to han die in creased product shipme nts from Russia and Azerbaija n, and en able crude swaps with Turkme ni sta n and Kazakhsta n. In the case of crude swaps, the oil from the Cas

59、pia n is con sumed domestically in Iran, and an equivale nt amount of oil is produced for export through the Persian Gulf with a Swiss-trading arm of NIOC for a swap fee.According to FGE, Khatam Al - Anbia Construction Headquarters (KACH, thecon struct ion compa ny con trolled by Iran' s Islamic Revoluti onary Guard Corps (IRGC,was awarded a newcon tract by NIOC worth $1.3 billio n to build two oil pipeli nes. The new oil pipeli n