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The Untapped Potential of Iran’s Gas Reserves and the Economic Implications

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Iran possesses the world’s second-largest natural gas reserves, estimated at nearly 34 trillion cubic meters, trailing only Russia in global gas reserves. Notably, Iran boasts two significant gas fields, namely the Sardar Jangal field in the north and the Chalous field in the Caspian Sea. When considering the reserves of these two fields, Iran actually claims the top spot globally in terms of gas reserves. However, due to questionable and treacherous agreements with Russia, Iran currently faces limitations on exploiting the Sardar Jangal gas field.

The geopolitical agreements, particularly the contentious contract with Russia, allocate 40% of the gas production from the Chalous field to Russia, 28% to China, and only 25% to Iran. It is crucial to note that these figures pertain to a field that has been discovered but not yet operational. According to estimates, the Sardar Jangal gas field alone holds approximately 50 trillion cubic feet of gas, more than ten times the Shah Deniz field in the Republic of Azerbaijan. Additionally, the Chalous gas field boasts a reserve of at least 3.3 trillion cubic meters, making it the tenth-largest gas reservoir globally.

Iran’s vast gas resources, when harnessed efficiently, could significantly enhance the country’s economic prospects. Currently, a substantial portion of the population struggles with poverty, with over half living below the poverty line. Leveraging the extraction and sale of gas could provide Iran with the means to improve the living standards of its citizens.

Regarding gas production, data from British Petroleum (BP) indicates that Iran produced approximately 260 billion cubic meters of gas annually until the end of 2022, making it the third-largest gas producer globally after the United States and Russia. However, despite its substantial gas reserves, Iran’s share of global gas production last year was less than 6.5%. Furthermore, Iran’s share in global gas sales was a mere 1.5%, primarily exporting to Turkey and Iraq.

Addressing the paradox of Iran’s significant gas reserves coexisting with domestic shortages, especially during high-demand winter months, requires an examination of the regime’s detrimental policies.

The autocratic rule, coupled with oppression against the populace, has led to the departure of Iranian experts from the country. Simultaneously, the regime lacks the technological prowess required for the efficient extraction of gas, particularly in offshore fields.

One such example is the Pars South gas field, one of the world’s largest, shared between Iran and Qatar. While Qatar efficiently exploits this field, becoming a major global exporter, Iran faces challenges due to Western sanctions and the absence of significant investments from major Western companies. Notably, companies like Total from France and Eni from Italy withdrew from agreements related to the Pars South gas field, opting to invest in Qatar and Azerbaijan instead.

Estimates suggest that Iran requires a minimum investment of $60 billion over the next decade to address the inefficiencies in its gas sector. Failure to secure this investment could lead to an annual deficit of 400 million cubic meters, exacerbating the current situation where the regime resorts to burning Mazut for power generation, causing environmental pollution and health hazards.

Recently, Hashem Aruee, the head of Iran’s Energy Associations Union, warned that without necessary investments in the Pars South gas field, Iran would lose one field phase annually, starting from 2025. This dire prediction carries severe economic consequences, threatening Iran’s economy and providing a cautionary tale to those who aligned themselves with Russia and China. The current regime, already teetering on the brink of bankruptcy, lacks the financial capacity for such investments.

In conclusion, the potential of Iran’s vast gas reserves remains largely untapped, primarily due to the regime’s mismanagement, corruption, and international isolation. The dire consequences of this mismanagement include domestic shortages, environmental pollution, and a bleak economic outlook. Only with a change in leadership and a renewed commitment to international collaboration can Iran harness its gas potential and transition into a major global gas exporter, benefiting its people and the broader economy.