Date: 06 Mar 2000
Time: 09:49:20
Remote Name: 156.29.145.175
Eghtessad-e-Energe (Energy Economics ) Jan, 2000, No.7 & 8 By: Gholamhossein Hassantash
Text: Undoubtedly in the politico-energy-geography of the world , Iran is strategically placed. Because of its prominent peculiarities some of which are unique , whether from its ancient civilization or its geographical or its extensive potentials points of view, Iran has always been at the center of attention of the world. Due to the mentioned points, other countries have always closely watched Iran's plans and policies.
After the downfall of the Soviet Union Iran's geopolitical and geoeconomic importance has become even more significant. The geostrategical consequences of that downfall in parallel with the enhancement of the level of relationships of Iran with the Muslim Arab neighbors in the Persian Gulf and the Sea of Oman as well as with the Indian subcontinent has given rise to new regional orders and hence to the expansion of politico- economic capacities with the governments of those countries and that of the Caspian Sea States.
The best example for these new developments is the plan of transmission of oil and gas of Caspian Sea region to the Persian Gulf and Sea of Oman for securing the energy needs of South and East Asia. Due to the fact that the resources of the Caspian region remain largely untapped and in the past there were political, reasons that hampered their better use, in the 90s they turned into the world's energy focal point and attracted the attention of all specialists and knowledgeable people and became a center for international challenges and rivalries.
I am of the belief that in order to develop the Hydrocarbon fields of that region the experiences of the past decade should be taken into view and the reasons for any success and failure be analyzed. For this purpose cooperation of three groups is necessary: First , the owners of the resources . Second , countries that have access to open seas and consuming markets. And Third, the ones that possess necessary technical knowhow and financial capabilities.
Sincere collaboration and just relationship among these groups can expedite the energy development of the region. Obviously these resources must first and foremost be at the service of economic growth of the countries of the region. However since the identified energy resources of the area is more than the domestic demands of the countries in question , export of the surplus qualities can supply certain energy needs of part of the world and help expedite economic growth of the countries of the region as well.
This subject, that is economic growth of the countries, is of particular importance and alongside good neighborly relations, works as the best guarantor of security of supply of energy in the vicinity.
It therefore follows that transmission of these resources to the world markets is a necessity and such a task must be based on well planned studies and forecasts so that most appropriate markets, routes and the cheapest means are selected for the purpose.
A comprehensive analysis in evaluating various possible routes for such a transmission allows 14 main routes. These include 4 northern, 4 western, 3 seabed , 1 eastern, 1 southern- east and 1 southern.
Here I am not trying to present a comparative analysis of the shortest and the best route by taking into account various factors such as economy , security, technical risks or environment for the Caspian littoral countries. There is no need for such a thing because it is clear that some western countries under the leadership of the U.S. are trying to derail the studies and planning of this transmission from the natural path to serve their own vested interests.
What I mean to say is nothing more than an emphasize on the evaluation of the fact that volume of such a transmission must naturally be based on the expectable demand of the consuming markets.
About the forecast of the trend of demand for energy in the first two decades of the next century numerous evaluations have been put forth. Almost all these evaluations uphold that the rate of growth in consumption of energy, especially oil, in east and southeast Asian countries will be higher than that of the rest of the world.
Following is a forecast presented by Energy Information Administration.
The fundamental question is what role the Islamic Republic of Iran can play in the next decade to provide for the huge and growing markets of south and east Asia.
In the oil sector, Iran can expand its production capacities within OPEC's framework to secure a significant part of the need of that region. At the same time Iran, because of its geopolitical and geoeconomic situation does realize that it must assume the important role of transmission of hydrocarbon resources of Turkmenistan , Kazakhstan and Azerbaijan to markets of the south and east Asia.
Bearing in mind the key factors in choosing a desirable route, the Islamic Republic believes that , the southern path across Iran into the Persian Gulf is one of the most favorable ways which can be implemented in three stages.
Stage one : Crude Oil Swaps using Tehran and Tabriz refineries.
Crude oil can be shipped to the northern ports of Iran from Azerbaijan , Turkmenistan and Kazakhstan and then to Tehran and Tabriz refineries and swap quantities can be delivered at the southern ports of Iran. The forecasted capacity of the 390 km pipeline carrying the crude from Iran's Neka port of the Caspian is estimated at 340000b/d. The cost involved to build such a pipeline is about 400 million dollars. It is worth nothing that such a capacity is easily expandable with the provision of minimum investment.
Stage two : Crude Oil Swaps using Esfahan and Arak refineries
Using this method a volume of 450000 b/d of crude can come by the sea or through a pipeline from west or east of the Caspian to Tehran . Reversing the function of existing pipeline between Tehran- Esfhan and Tehran- Arak can take care of the task. Cost of building a pipeline either from Azerbaijan to Tehran or Kazakhstan, Turkmenistan to Tehran will be 300 to 500 million dollars.
Here I would like to draw your kind attention to the financial analysis of investment and transmission of crude oil from Turkmenistan and Kazakhstan to Neka shown in Table (2).
Also please see picture (1) about implementing of first stage of swap. In picture (2) the second stage of swap is depicted.
Stage three : Direct Transfer of Crude of Turkmenistan and Kazakhstan to the Persian Gulf, through Kharg and other terminals of Iran.
Alongside primary studies for the transmission of crude directly into the Persian Gulf, the Ministry of Petroleum of Iran has undertaken a study of probable routes and means depicted in Picture (3).
The important point to note is that the present loading capacities of Iran at Kharg, Lavan and Sirri terminals are more that 5 mb/d and needs no fresh investment.
Besides points mentioned above there is yet another plan that has been taken seriously by Iran. Building one or two 200000 b/d new refineries to process the incoming crude and using their yields in the north of Iran.
Eventually by using the present facilities and installations an average of 780000 b/d of crude from the three countries can be transmitted by 2006.
I would now like to touch on the subject of touch on the subjects of transmitting natural gas through Iran. As you may know , the Asian market especially that of the south and east has a clear prospect of an increasing demand for natural gas as well. It is worth noting that the share of gas consumption in the whole of energy demand of this continent it estimated to increase from 21% (470bcm ) in 1996 to 29% (580bcm) in 2010. It therefore follows that natural and economical market for the surplus gas of Caspian region will not only be Europe but Asia too.
Iran which by itself accounts for 15% of the world gas reserves can along with gas - rich Turkmenistan provide for a great part of European gas market.
On the other hand in view of 8 August 96 agreement for sale of gas ratified between Iran and Turkey, there is a chance that the Turkmen gas be utilized in the northern parts of Iran and equivalent volume of Iranian gas, tapped from its southern field, be transmitted to Turkey and Europe.
In choosing the routes for the transmission of Caspian region gas to Europe and Asia there seems to be certain interference from some countries who give priority to their political interest rather than that of economic interest of the countries of the region. This can be very destructive for the economies of these countries.
I would like to emphasize that Iran does realize its responsibility in providing for part of ever increasing demand of gas in the world and by developing its recovery capacities and creating acceptable facilities for the transmission of gas resources of the neighboring countries to the markets will fulfil its obligation. In this direction connection of the Turkmen gas pipeline to the existing network in Iran and the ones under construction to Europe and the Indian subcontinent will be covered.
It is obvious that the route through Iran is not the only way for the export of oil and gas of central Asia and the Caucasus. There will surely be other routes created. This route is among the cheapest ones. However some industrial states will first try creating more difficult and costlier ones and then propose the route through Iran for their own counterparts in the region . This is because creation of new facilities for such a transmission is of both economic and political considerations. The political one is decided by governments and the economic by companies and investors. For all practical purpose a blend of these two aspects is necessary. And any one aspect overweighing the other would be detrimental. Especially if the political aspect is overemphasized and the economic side is ignored then the main target which is the improvement of the economic situation of the central Asian countries will not be achieved.
As mentioned earlier we will welcome any route that would secure that bilateral and multilateral regional relations which would ensure the real interests of the countries and facilitate their economic growth. This way we believe the security of supply of energy of the region to the world would be guaranteed.
For the full article plus tables, see: http://www.netiran.com/Htdocs/Clippings/FEconomy/200122XXFE01.html