Iran’s 2nd and last oil peak

“Iran’s Supreme Leader Ayatollah Ali Khamenei said in Tehran that Iran has become addicted to selling crude oil and the time has come that the country voluntarily shut down some of its oil wells” See link below.

The IEA monthly oil market report (OMR) of July 2012 had a graph on peaking Iranian oil production . Let’s add crude oil production which is lower (red curve), from various OMRs. The difference is made up of natural gas plant liquids. The consumption curve is from the BP Statistical Review 2012

The blue production curve underlying this graph is from the IEA Monthly Oil Market Report July 2012, page 19.

Source: 1965 – 1982,: BP Statistical Review of World Energy, 1983 onwards: IEA, 2012 refers to 1H2012 only

We can see that Iranian oil production is declining since around 2007. Consumption (green curve) stopped to grow in the same year, when petrol rationing was introduced. The sanctions accelerate the peaking.
The red curve is crude oil only.

The 1st  peak occurred in the mid 70s, before the Iranian revolution. Under the Shah, oil production was ramped up very fast in a few giant fields, in competition to Saudi Arabia.

We can see that one giant oil field after the other was stacked on top of each other, to reach very high levels of 6 mb/d which could not be maintained. For the next 30 years, production never exceeded the 1970 peaks. These fields are now very mature and are in long term decline, with or without sanctions. Field data are from Jean Laherrere, ASPO France,

As per BP Stat Review 2012 Iran’s cumulative oil production end 2011 was around 69 Gb.  Here are some simple depletion level calcs:

(1) ASPO Newsletter 46:     69/110 indicated total= 63%

(2) Laherrere:       69/(69+60 remaining 2P) = 69/129 = 53%

(3) Sam Foucher/Westexas 124 Gb:  69/124 = 56%  (+- 6%)

Let’s compare that with slide #36 shown by PFC Energy at a presentation to Centre for Strategic and International Studies (CSIS, Washington) in 2004, when Iran was at a depletion level of 50%:

So 8 years down the track Iran has proceeded further in the red box indicating a production plateau. Therefore, the above depletion levels also suggest that Iran can’t increase production even if sanctions were lifted.

We can also compare PFC Energy’s production projection with actual IEA crude oil data

PUD= proven undeveloped

Geopolitical implications

While governments and also many peak oilers endlessly debate the global peak, what is completely forgotten are the socio-economic and strategic consequences of the peaking in key countries, particularly in the Middle East.

While writing this article, Iran test fired another missile.

This selection of recent articles on Uskowi’s blog describe the current situation in Iran:

Iran to devalue currency

4/8/2012   30% devaluation expected

The Central Bank of Iran will officially devaluate the national currency rial, the deputy minister of commerce and industry told Mehr News Agency today. The official exchange rate is now 12,260 rials per dollar, but rial is traded in currency markets at the rate of 20,020 r/d, a whopping 63 percent differential. By devaluating the rial, the CBI seeks to close the gap between the official and the market value of rial and avoid the simultaneous existence of hugely different exchange rates.

Janati asks public to buy less fruit, sweets and syrups

4/8/2012    Ayatollah Ahmad Janati, chairman of the powerful Guardian Council, and today’s Tehran Friday Prayer Imam said in his sermons today that the rapid rise in prices is “a transient and periodic issue.” He said the rising prices were a wartime development like in the period of Iran-Iraq war. Janati asked the public to buy less.

Khameini speaks against oil-based economy

29/7/2012    Iran’s Supreme Leader Ayatollah Ali Khamenei said today in Tehran that Iran has become addicted to selling crude oil and the time has come that the country voluntarily shut down some of its oil wells.

“Generating wealth through selling minerals like crude oil does not equate to (economic) development and growth. We are making fool of ourselves. We have fallen into a trap. We should confess and accept that this is a trap for our nation,” Ayatollah Khamenei said.

Iran stockpiling food supply

28/7/2012   Iran’s ministry of commerce and industry said the country has begun to stockpile a three-month supply of foodstuffs. Deputy Minister Hassan Radmard said his ministry has been buying wheat, cooking oil, sugar and rice for the food reserve.

Iran bolsters retaliation capability in Persian Gulf, experts say

27/7/2012    Iran is rapidly gaining new capabilities to strike at U.S. warships in the Persian Gulf, amassing an arsenal of sophisticated anti-ship missiles while expanding its fleet of fast-attack boats and submarines, U.S. and Middle Eastern analysts say.

Well, that tells you everything

The Australian Parliament was well informed about peak oil by Dr. Bakhtiari

during the hearings of the Standing Committee on Rural and Regional Affairs and Transport for the “Inquiry into Australia’s future oil supply and alternative transport fuels”

in this presentation to the Senate on 10 July 2006

Federal and State governments chose to ignore the warnings which one day will be noted in history books.

This reticence culminated in the Federal government not tabling an internal – but leaked – peak oil report before the Senate in February 2012. Let’s take this opportunity to compare actual Iranian crude production with projected production in this report:

This means that the 2017 global peak calculated in BITRE 117 may be too optimistic. Details on how the Australian government refused to table the report to the Senate (Minister: “not up to scratch”) are here:

Australian Government kicks own goals in Senate peak oil debate (peaky leaks part 3)

Related posts on this website:

Iran playing war games but not in video arcades

Iran crude oil decline to 2016

Iran needs $60 bn from foreign banks to stop 1 mb/d oil production drop by 2015. Anyone interested?

Another warning on Iran’s oil production and exports

Iran needs $130 oil to balance budget
IEA: Iran’s crude oil production to decline by 700 Kb/d by 2015