The IEA has suggested Iraq surpassed Iran in output for the first time in over 20 years
The Iranian people are faced with spiralling inflation and job layoffs within the state sector
Iranian oil revenues in the country plummeted 40 percent, while gas export revenues fell by 45%
Editor’s Note: John Defterios is CNN’s Emerging Markets Editor and anchor of Global Exchange, CNN’s prime time business show focused on the emerging and BRIC markets. You can watch it on CNN International at 1600 GMT, Sunday to Thursday.
All indications are that sanctions against Iran are really starting to bite and this time it is coming from the oil ministry in Tehran, which for months has denied that oil production was suffering due to international pressure.
In an interview with the Iranian Student News Agency (ISNA), Gholam Reza Kateb a member of the national planning and budget committee in Parliament referenced a report from Iran’s oil minister Rostam Qasemi. In that report, the minister suggested that oil revenues in the country plummeted 40 percent, while gas and gas products’ export revenues fell by 45% compared to the same period last year.
This is a hot button issue in Iran, where the currency due to sanctions has dropped 80 percent from its peak in 2011. The Iranian people are faced with spiralling inflation and job layoffs within the state sector.
I spoke with a source in Iran’s representative office to OPEC who declined to comment and referred all matters to the Oil Ministry. A spokesman at the state oil company Iran Petroleum would only say “in this political climate it is difficult to confirm these statements.”
Hours later, a spokesman from the Ministry told another Iranian news agency, Mehr, that the numbers quoted about revenue and production drops are not true, although he offered no specific numbers.
Until this report to the Iranian Parliament, Minister Qasemi has maintained that Iran’s production was hovering around four million barrels a day, where it was two years ago.
Back at the OPEC Seminar in June 2012, the minister told me that sanctions would not have any influence on plans to expand production and investment, shrugging off questions that suggested otherwise. This despite analysis to the contrary from the Paris based International Energy Agency and Vienna based OPEC of which Iran is a member.
The IEA back in July suggested that Iraq surpassed Iran in production for the first time in over two decades and production in Iran dipped to 2.9 million barrels a day. OPEC in its October 2012 survey said it slipped to 2.72 million at the time Minister Qasemi said output remained at 4 million barrels.
Minister Qasemi was recently quoted at a conference in Tehran that Iran needs to invest $400 billion over the next five years to maintain production targets and to play catch up after years of under investment.
Iran is a land full of potential. According to the annual BP Statistical Review, Iran sits on nearly 10 percent of the world’s proven reserves at 137 billion barrels. The South Pars field which it shares with Qatar is one of the largest natural gas fields in the world – but Iran, due to sanctions, cannot expand development.
This is a highly charged period. With elections in mid-June, it remains unclear how energy policy will evolve after the era of President Mahmoud Ahmadinejad passes. It has been eight years of his tough line against Washington, Brussels and other governments that put forth sanctions against Iran. It is not clear if a new President will usher in a new nuclear development policy to ease the pressure on Iran’s energy sector and the country’s people.