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Reply #13: Iran's oil production is declining SEVERELY. SA is taking advantage. [View All]

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robertpaulsen Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-19-07 04:53 PM
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13. Iran's oil production is declining SEVERELY. SA is taking advantage.
Iran oil industry founders, report says


The Associated Press

WASHINGTON Iran is suffering a staggering decline in revenue from its oil exports, and income could virtually disappear by 2015 if the trend continues, according to an analysis published Monday in a journal of the National Academy of Sciences.

Iran's economic problems could make the country unstable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern said.


What's Behind The Crash In Crude Oil?

By Gary Dorsch

January 10, 2007


Yet given a difficult investment environment and concerns over its nuclear program, Iran has been unable to upgrade its oil facilities, nor increase production capacity for the past few years. Oil production was stagnant last year, which resulted in the oil sector expanding by just 0.6% in real terms. Instead, Irans economy is being driven by higher government spending, which grew by 5.4% in real terms in 2006, the highest rate of growth in five years.


The latest plunge in crude oil, perhaps inspired by Saudi Arabia, is likely to put a squeeze on Irans budget surplus, which could turn into a deficit if oil prices fall towards $45 per barrel. To finance the governments subsidies, Irans central bank increased the broad money supply by 36% in 2006, sending inflation soaring to 14.6% in September. Tehran cannot afford to cutback on oil production and reduce its oil income, without cutting back on subsidies and risk riots in the streets.


While apparently ruling out the military option for 2007, the Europeans and the US are quietly engaging in economic warfare with Iran, by demanding that international banks and oil companies to pull out of dozens of Iranian projects, including development of Irans two massive new oil fields Azadegan and Yardavan that could expand Irans output by 800,000 bpd over the next four years.
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