Iran Sanctions - Foreign Press Centers

Iran Sanctions
that Iran has lost $60 billion in investment as numerous major firms have either announced
pullouts from some of their Iran projects, declined to make further investments, or resold their
investments to other companies. It is therefore highly unlikely that Iran will attract the $145
billion in new investment by 2018 that Iran’s deputy Oil Minister said in November 2008 that
Iran needs. Similar estimates come from independent Iranian energy experts, who say that, as of
October 2011, the sector needs $130 billion in investment from 2011 until 2020. 54 Observers at
key energy fields in Iran say there is little evidence of foreign investment activity and little new
development activity sighted, including at the large South Pars gas field that Iran has focused on
for at least 10 years.
Still, according to the Energy Information Administration, Iran’s oil production has risen slightly
(about 4 million barrels per day) and net exports have not fallen significantly, if at all, over the
past five years. 55 It might take several years for the lack of investment to show up in declining
Iranian oil production. Production is projected to fall to about 3.3 mbd by 2015. 56 That estimate is
somewhat less than the 25% decline over the next five years (by 2016) that the GAO August 3,
2011, report, quoting Oil and Gas Journal, estimates is possible.
Others maintain that Iran’s gas sector can compensate for declining oil exports, although Iran has
used its gas development primarily to reinject into its oil fields rather than to export. Iran exports
about 3.6 trillion cubic feet of gas, primarily to Turkey, but also to Armenia. Some Members of
Congress believe that ISA would have been even more effective in injuring Iran’s energy sector if
successive administrations had imposed ISA sanctions more aggressively.
A Government Accountability Office (GAO) report of August 3, 2011, contains tables that discuss
those firms that have discontinued commercial activity in Iran’s energy sector, as well as those
still operating and investing. 57 Table 3 shows international firms that have invested or remain
invested in Iran’s energy sector. Some of them have not been determined to have violated ISA and
may be under investigation by the State Department. As discussed above, some firms have been
sanctioned, and others have avoided sanctions either through Administration waivers or
invocation of the “special rule.”
The EU sanctions apparently have also derailed a BP-NIOC joint venture in the Rhum gas field,
200 miles off the coast of Scotland. BP announced in November 2010 that it would stop
production there to ensure compliance with the EU sanctions. In addition, partners in the Trans-
Adriatic Pipeline (TAP) said in September 2010 that the pipeline would not be used to transport
Iranian gas to Europe.
Concerns About “Backfill”
There has been a concern that some of the investment void might be “backfilled,” at least partly,
by Asian firms such as those from China, Malaysia, Vietnam, and countries in Eastern Europe.
However, many such deals are said to be in preliminary stages, and clear examples of
54 Khajehpour presentation at CSIS. Op. cit.
55
http://www.eia.gov/cabs/iran/Full.html.
56
http://online.wsj.com/article/SB10001424052748704569204575328851816763476.html.
57
GAO. GAO-11-855R. Firms Reported in Open Sources As Having Commercial Activity in Iran’s Oil, Gas, and
Petrochemical Sectors. August 3, 2011.
Congressional Research Service 47