Iran’s oil revenue running dry, analysis shows


Richard Moore

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Iran's oil revenue running dry, analysis shows

Monday, December 25, 2006

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

Iran's economic woes could make the country unstable and vulnerable, 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 (U.S.) a year in oil exports. The decline is 
estimated at 10 to 12 per cent annually. In less than five years exports could 
be halved and then disappear by 2015, Mr. Stern predicted.

For two decades, far longer than its designation by U.S. President George W. 
Bush in January 2002 as part of the ³axis of evil,² the United States has 
deployed military forces in the region in a strategy to pre-empt emergence of a 
regional superpower.

Iraq was stopped in the 1991 Persian Gulf War, but a hostile Iran remains a 
target of U.S. threats.

The U.S. military exercises have not stopped Iran's drive. But the report said 
the country could be destabilized by declining oil exports, hostility to foreign
investment to develop new oil resources and poor state planning, Mr. Stern said.

Mr. Stern's analysis, which appears in this week's edition of the Proceedings of
the National Academy of Sciences, supports U.S. and European suspicions that 
Iran is trying to develop nuclear weapons in violation of international 
understandings. But, Mr. Stern says, there could be merit to Iran's assertion 
that it needs nuclear power for civilian purposes ³as badly as it claims.²

He said oil production is declining and both gas and oil are being sold 
domestically at highly subsidized rates. At the same time, Iran is neglecting to
reinvest in its oil production.

³With an explosive demand at home and poor management, the appeal of nuclear 
power, financed by Russia, could fill a real need for production of more 

Iran produces about 3.7 million barrels a day, about 300,000 barrels below the 
quota set for Iran by the oil cartel, the Organization of Petroleum Exporting 

The shortfall represents a loss of about $5.5-billion a year, Mr. Stern said. In
2004, Iran's oil profits were 65 per cent of the government's revenues.

³If we look at that shortfall, and failure to rectify leaks in their refineries,
that adds up to a loss of about $10-billion to $11-billion a year,² he said. 
³That is a picture of an industry in collapse.²

If the United States can ³hold its breath² for a few years it may find Iran a 
much more conciliatory country, he said. And that, Mr. Stern said, is good 
reason to belay any instinct to take on Iran militarily.

³What they are doing to themselves is much worse than anything we could do,² he 

³The one thing that would unite the country right now is to bomb them,² Mr. 
Stern said. ³Here is one problem that might solve itself.²

© The Globe and Mail

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