Wednesday, May 1, 2013

Iran Oil Exports at 26-Year Low


Iran’s oil exports totaled $69 billion in 2012, a 27 percent decline from $95 billion in 2011, U.S. Department of Energy (DoE) reported today. The DoE estimates put Iran’s oil exports in 2012 at 1.5 million bpd, a 26-year low, and 25 percent lower than the 2.5 million bpd in 2011. (UPI, 1 May)

With payments for oil exports effectively blocked, Iran has begun trading oil in local currencies, like the rupee in India, using them to purchase local goods.

The trend of lower oil exports is expected to continue in 2013, with exports at significantly less volume than last year. The Financial Times observes, “at some point Tehran will be forced to cut already low production.”
File photo: Iran's main oil export terminal at Kharq Island (Getty Images)

28 comments:

Anonymous said...

This is great news and just confirms Iran's successful diversification of its self-reliant economy and increasing non-oil global trade and manufacturing. Every barrel saved today will be worth ten times more in the energy depleted world.

Mark Pyruz said...

The more significant figure is oil-based revenue (I'm guessing it's at early to mid 00's levels, and to a somewhat lessor extent "undeclared" exporting activities.

Nader Uskowi said...

What is so great about this news, Iran’s exports at 26-year low? If that’s such a great, why didn’t the Islamic Republic cut its oil exports voluntarily long time ago and had to wait for the West to embargo its oil? Or is it that whatever news come out of Iran needs to be spinned as “great?”

Nader Uskowi said...

Not these days, Mark. The oil prices show downward trend. But have no idea on "undeclared" export activities, what are those activities?

Anonymous said...

For Mark Pyrus, Iran is always successful - no matther what facts are suggesting; that shows to you that he has no interest in actual Iran; he is only interested in an image of Iran; the good thing about an image is, that it does not resist your lies; you can turn around - remake it, redefine it as you wish - without a necessity for you to have to assume any form of responsiblity for the reality, which you do not care about anyway; Mark Pyrus wants to feel good; that is the only thing he actually care about - himself ....

foadtorshizi said...

This is a blessing in disguise. The Islamic republic is forced to not sell oil. That is good news. With all due respect, I believe rhetoric is an issue here too. Is it 26-year low in income from oil export as well, or is it just 26-year low export-wise, as the two differ rather drastically and I believe that the former (income) counts more significantly in economic status than the number of gallons.

Anonymous said...

Thats the nice way of saying sanctions busting,and theres a difference between voluntarily diversifying ones economy and being forced to,personally I think this is a case of That which does not destroy me makes me stronger,or if you want something a little less nietzschein,then every dark cloud has a silver lining.Once again the west has underestimated iran,you know I`d have thought they`d have wised up by now,Iran isnt some corrupt "arab dictatorship" that they can crush

Anonymous said...

I think that I`d take those DoE claims with more than a little pinch of salt,maybe a salt mines worth in fact.

Nader Uskowi said...

Let’s examine once again what this post was all about, before making it into an ideological war. First the facts: the post says Iran’s oil exports have hit a 26-year low due to sanctions. I assume all agree that the oil exports have been cut significantly. Some statistics, like the ones published by IEA, shows even deeper cuts in revenues ($40 billion in 2011) than DoE’s estimates.

Then it is the interpretations offered by commentators on that fact. This blogger’s argument is not that Iran needs to sell as much oil as possible. On contrary, I have for a long time argued publicly for the need for diversification of Iranian economy away from its dependency on oil. My problem with some of the comments here is as if it was the policy of the government to reduce oil exports in order to diversify the economy. That’s simply not true, you are just spinning any and all news to show the righteousness of the government. The Islamic Republic had a golden opportunity to diversify its economy after the war with Iraq, but decided to maximize oil exports and run the economy the way the Shah’s government did. Same thing will happen again when the sanctions are lifted, unless the nation start a serious conversation, and start it now, on why it was indeed a blessing in disguise to have the oil embargoed and why post-sanctions days the government should not revert back to its previous policies.

Anonymous said...

Not really. Mark and most rational people just show the positive achievements of the revolution that annoys the ranting anti-Iran element that has to criticize any achievement of the Islamic Republic which has done an amazing job despite all US/Zionist attempts to destabilize it. IRAN PAYENDEBAD.

B.M.A said...

uskowi!

-SEEMS that you are blind on the many efforts to diversify the economy on the part of the Government. Am in the view that your dismissive attitude on the regime is taking its toll on you, pushing you into blindness!look at your argument 'why didn't the IRI cut its oil exports voluntarily long time ago and had to wait for the west to embargo its oil'!!-SURELY be honest -is it prudent for an economy smarting from a grueling eight year war to be starved of oil revenues?.
@question-And suppose the Government did that ,would you support that development or would YOU do the usual business of bashing and accuse the regime of 'castrating the economy exposing the masses to some hardships yet the country is rich with resources?'

indeed you are a diehard critic !i think the Government will earn some praise from you only when it does nothing!!.

Nader Uskowi said...

B.M.A.,

Due to your lack of understanding of the seriousness of the issue discussed here, you can only resort to personal attacks on the author. The essence of my argument here is not if the cut in oil exports is bad for Iran in the long run, but the lack of clarity of the government’s policy, to say the least. When the sanctions end, which will happen sooner or later, this government more likely will resort to maximizing the oil exports and will forget talks of diversification of the Iranian economy away from dependency on oil. We’ve seen that movie before, both during the Shah and in the past 35 years. But I guess it’s difficult for you to understand the issue and you need to discuss my eyesight!

B.M.A said...

Am not belittling your intelligence ,only highlighting something!!.NOW UNLESS YOU are 'receiving some inspirations',your prophecy that 'this government more likely will resort to maximizing the oil exports! and forget something!- isnt this what you should have focused?

@- what has the Nation put in place in its effort to diversify the economy!

@-what needs to be done [here i expect you to give expert advice]

@-Has the regime learned anything from the humiliations of sanctions what has it done to reduce the fangs of the embargoes!

the government has done,is doing and has planned more project in that area and YOU KNOW BETTER!!.

Nader Uskowi said...

It's not called prophecy; it's analysis! And my analysis is based on the government's performance in the past 34 years, and in 37 years of Shah's government. Can governments change policies, of course they can. But a public conversation of this sort is helpful on this important issue, the over-dependency of successive Iranian governments on oil exports.

Anonymous said...

Anon 5:59 AM....The only anti Iran elements are those Hezbollahi cretins in power today.But the biggest sellouts are the lowlife druggies the regime employs to peddle their nonsense.

Anonymous said...

Yes, Iran is a thriving democracy and governments do change regularly but the popular Islamic Republic is eternal.

leopersica said...

@Anon May 1 ,2012 at 9:25 Pm
On the contrary its a confirmation that IRANIAN policy towards Oil and gas industry has been the same in over 60 years of nationalized Oil industry!105 years has Passed and Iran still relies heavily on CRUDE sales ! The OIL will not stay under ground !Iraq Oman Azerbaijan and Qatar have shared reservoirs with us on some of those reservoirs our exploitation rate is 1/100 of some of them!
@foadtorshizi,
I do not see rhetoric here ,i See 60 years of wrong policy !

leopersica said...

@B.M.A
I have to second ,Mr Uskowi's take on the matter.
Iranian policies towards nationalized OIL and GAS has been the same throughout both regimes ,in sixty years of Nationalized oil we have only nationalized sales of CRUDE OIL we have in no way nationalized our industry .
Remember that Norway ,with significantly lower proven Hydrocarbon reserves and less experience in O&G industries(25 yrs compared to 106 yrs) makes significantly more money on its natural resources.
Norway has wisely devised a policy of diversification:
1)Maximizing upstream(Crude Production) investment resulting in very high recovery rates on their proven reserves(45 % compared to Iranian 25%)
2)investment in middle-stream (refinery Capacity) industries thus avoiding CRUDE exports
3)investment in downstream Industries(petrochemical complexes ) using middle stream product
4) Heavily investing in all services and technologies relating to O&G industries thus Norway is a net exporter of these services to Europe ,America Asia and middle east
5)investment on high added value finished products thus Norway does not export Polymers it exports finished products or specialty products
6)Norway does not inject Oil revenues directly to its economy it invests the revenues and uses the surplus benefits to boost the economy (a complete privatized model)
IRANIAN policy makers are not blind they see what others have done , but to deliver meaning full results requires many obstacles to overcome!(Subject to further discussions and debates on this panel)
To give you just one example of these obstacles :
NIOC or (National Iranian Oil company ) ---created in 1950's to develop Iranian New Nationalized resource was built on the foundation of the old Anglo-Iranian Oil company a client of British empire and built to serve the needs of that country .(Maximum Upstream production (In iran )for export to downstream and middle-stream industries located and owned by the British part of the AIOC in the isles.
Ironically this structure remains the same 60 years after the nationalization of Oil industries. the article of association of NIOC remains largely the same as its inception 60 years ago the one currently valid article of association is dated 1977. In this document the sole mandate of the company is stated (!!!!) MAXIMIZING CRUDE OIL production and the company is allowed to do so by use of legally imported EQUIPMENT and SERVICES from ABROAD.
In 1979 Iranian Oil ministry was created to moderate NIOC and to implement governmental policies in the development of O&G resources .
It is interesting to see that the article of association of ministry of Oil states the most important mandate of the ministry is to diversify production chain CURTAIL CRUDE SALES and achieve SELF SUFFICIENCY and promote INDIGENOUS Technologies and Know-how in production of equipment and delivering the required services .

In fact the oversight governing body(Ministry) designed to moderate the production giant (NIOC)has the mandate to change NIOC operation from grassroots but it has failed.
on the other hand NIOC is doing what it was designed to do Export Crude ,designed by (Ironically) British interests to its own benefit (and by extension ) and those in the developed countries of the world.

but why?
To give you a sharp example : MINISTRY OF OIL budget in fiscal year of 2012 was about 900 thousand dollars
While NIOC budget(unofficial estimate) is a percentage of Iranian Hydrocarbon revenues estimate to be around 26 billion USD per annum

Inefficiency of Bureaucracy my dear friend is our no 1 enemy Not the UNITED STATES!

leopersica said...

Mr Uskowi and BMA,
Continued from my previous comment :
current sanctions on Iranian Crude production may provide a golden opportunity to change this wasteful POLICY of Maximized Crude Production and Export for the first time in 60 years ,once before when gasoline imports was sanctioned in 2008 it was demonstrated that Iranians have been very successful in expanding very rapidly their refining capacity (middle Stream) in less than three years and successfully close the huge 40% gap of production and consumption in gasoline .and thus rendering gasoline sanctions of 2009 ineffective!
However achieving a Norway Status requires many years and resources including human and financial .
our young engineers and scientists are talented but not magicians
our national funds is not enough to provide vast resources needed to build all these facilities.we need access to International markets , universities and companies in normalized relation with the part that possesses most valuable of these resources US and EU .
Iranian government knows this and knows very well it is not a matter of rhetoric and propaganda to resolve these issues ,I do hope that a peaceful resolution of current differences would come soon !I think on this matter we all agree but to resolve the issues requires both parties to be willing i do not see the west willing in this matter I beg to differ with Mr Uskowi .
seems to me that the Iranian Government has chosen to resist the pressure and gain an equal standing in the ongoing negotiations ,they have proven to be quite patient and persistent in their resistance !a policy that roots back to shiism and has been proven with the very successful eventual defeat of Saddam !
on this matter the most vocal supporters in the west are the Leverrets and Vali Nasr !
with them I agree and I encourage all friend to read their book without prejudice !
we all love democracy but remember folks we can not eat democracy!!

Nader Uskowi said...

leopersica,

Thanks for the insightful comments.

On Norway: As you have pointed out, the government was aware of the Norwegian model well before the oil sanctions began. In late 2005, the first year of Ahmadinejad’s presidency, I was invited by the new government to present them a comprehensive proposal on the oil industry after I and another colleague at Ayandehnegar website and other Iranian publications had discussed the Norway model, with the emphasize on the national trust that had been created in that country to channel oil revenues to long-term investment project, within the oil industry and outside. We had argued that Norway was already making more money from its unit trust investments that from its oil sales, as opposed to Britain that had the same access to North Sea fields but had decided to sell the oil and put the proceeds in its general budget, much like Iran, and had not much to show for it.

In early 2006, I personally presented the proposal to Dr. Parviz Davoodi, then the first vice president and formerly the chair of economics at Shahid Beheshti, and his economics team. The meeting, which started late at night into the wee hours of the morning at Pasteur, was one of the most dynamic meetings I had ever participated. With many questions asked and a genuine sense of optimism shown on the future of the oil industry in the country. All agreed that drastic reforms to the vision and the structure of the industry were needed (that’s why they had invited this analyst to present his case).

Seven years after that gathering, nothing has changed. There was no strong political will in the country to make the necessary reforms. The politicians were more than happy to continue the old model of selling the crude, no serious diversification of the oil industry, and defiantly no creation of a national trust, whose trustees I had proposed to be elected by Majlis, but the body would have acted as an independent organization outside the government. And they continued on their old model. Meanwhile, Norway makes more money from its oil-generated investments (local and foreign investments) than their oil revenues. (BTW, Davoodi was replaced during Ahmadinejad’s second term, first by Mashaie for a few days, and after he was forced out by Khamenei, Rahimi got the portfolio.)

foadtorshizi said...

The question of rhetoric appertains to whether this 26-year low is a mark on revenue or just number of galons, as the latter is not very significant compared to the former. I think the problem is more eloquently addressed below by Mr. Pyruz.

Anonymous said...

I was hoping you would've had an answer for this pressing question asked by BMA

Is it prudent for an economy smarting from a grueling eight year war to be starved of oil revenues?

Nader Uskowi said...

Fair enough: between the end of the war and the start of the oil sanctions you had some 23 years. What did the government do during all these 23 years regarding the oil policy? Nothing new, all as usual, selling crude. So it is not the question of a few years of catching their breath right after the war, but 23 long years! Hope I have answered your and BMA’s question.

Anonymous said...

Anon 9:02 PM....Nothing is eternal,specially the Islamic bandits in Iran.
Now go and receive your free sandwich and juice from your bandit masters.

Anonymous said...

In fact it is quite the opposite of what you are saying. I don't see your claims being backed up by any concrete evidence, but take a look at this PDF file, I wish I could post some of it graphs here. Iran's non-petroleum export did not tripple or quadruple after the war, its growth is exponential and drastic — from almost nothing right after the war to 100'000 million dollars a year. So, the 23 year long wasn't just for nothing as you say.


www.goo.gl/sIhfy

Nader Uskowi said...

Our discussion here was on Iran's oil industry and its diversification, or lack of. Earlier in this thread, I did discuss the Norway example and how they used the oil revenues for investment, which is now bringing more revenues than the oil exports. The reference to 23 long years was about what the government did or did not do about oil. Please read the discussion thread and try to stay honest to its context.

Anonymous said...

leopersica May 3, 2013 at 5:53 AM
Well said,excellent posts

B.M.A said...

Anon may 3 2013 at 3:00 am!

always a hungry man!!

your biggest undoing is your habit of visiting this blog with an empty stomach hence !! hence your fondness with juices and hot sandwiches!!.-TEACH AS SOMETHING MAN! .and then invite us to your eatery!.