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IEA: Iran’s crude oil production to decline by 700 kb/d by 2015; budget neutral oil price $130 a barrel

The new IEA Medium Term Oil Market Report 2010
http://www.iea.org/W/bookshop/add.aspx?id=397

iea_opec_crude_incremental_capacity_2009_2015 estimates Iran’s oil production capacity will decline by 700 Kb/d by 2015.  The above graph shows the  change of crude oil capacities between 2015 and 2009, for various OPEC countries.

Assuming continuing domestic growth of oil consumption for a 70 million population  this means that Iran’s oil exports will be half in just 5 years.

iran_exports_to_2015_implied_by_iea_medium_term_2010

What does that mean for the Iranian budget?  The Iranian Press TV reports:

Iran’s new budget bill and its challenges

8 March 2010

“…..In 1389 [year 2010 starting in March]  crude and oil byproducts incomes stand at %51 of the budget revenues…. the 1389 Budget Bill, that will be passed by the Parliament after making amendments within the next fortnight, has been projected on the basis of oil prices of US$65 p/b and US dollar -IRL exchange rate of 9850 Rials..”

http://www.presstv.ir/detail.aspx?id=120361&sectionid=3510304

Therefore, provided all other factors being equal, oil prices need to double from that level to $130 a barrel for declining oil exports to be revenue neutral.

Although many countries are struggling to maintain a balanced budget the geo-political implications of declining oil exports from Iran are incalculable.

The above estimate, however, could well be too optimistic. I have superimposed oil production and consumption curves on the estimate range provided by the late Dr. Bakhtiari which he presented at an ASPO conferennce in May 2003, in Paris:

Workshop:

http://www.peakoil.net/conferences/iwood-2003-paris

Dr. Bakhtiari’s paper

http://www.peakoil.net/iwood2003/paper/BakhtiariPaper.doc

It is interesting to note that Dr. Bakhtiari’s WOCAP model contains “geo-politics” as a factor impacting on oil production

wocap_model_flow_chart

http://www.uvm.edu/~gflomenh/ENRG-POL-PA395/readings/2007-oil-peak.pdf

In his 2006  testimony to the Senate Inquiry on future oil supplies he had explained the transition phase T1 between growing and declining oil production and that the world will experience new econpomic rules:

http://www.aph.gov.au/hansard/senate/commttee/S9515.pdf

Another warning about export extinction in Iran (by 2014-2015) was published in 2007 in the Proceedings of the National Academy of Sciences of the US.

The Iranian petroleum crisis and United States national security

http://www.pnas.org/content/104/1/377.full

Although all of the above reports and the latest IEA decline rate arrive at different time frames for exports going towards zero this problem will for sure attract the world’s attention in the next years to come, long before the actual zero point is reached.

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