Iran's oil exports are declining, study says
Instability called a likely outcome
BY BARRY SCHWEID
ASSOCIATED PRESS
December 26, 2006
freep.com
WASHINGTON -- Iran is suffering a staggering decline in revenue from oil exports, and if the trend continues, income could virtually disappear by 2015, according to an analysis released Monday by 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 gets about $50 billion a year from oil exports. The decline is estimated at 10% to 12% annually. In less than five years, exports could be halved and then disappear by 2015, Stern predicted.
The report said the nation could be destabilized by declining oil exports, hostility to foreign investment to develop new oil resources and poor planning, Stern said.
The analysis supports U.S. and European suspicions that Iran is trying to develop nuclear weapons. But, Stern said, there could be merit to Iran's claim that it needs civilian nuclear power "as badly as it claims."
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 oil production.
"With 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 electricity."
Iran produces about 3.7 million barrels of oil a day, about 300,000 barrels below the quota set for Iran by the oil cartel, the Organization of Petroleum Exporting Countries.
The shortfall represents a loss of about $5.5 billion a year, Stern said. In 2004, Iran's oil profits were 65% of the government's revenues.
"If 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," he said.
If the United States can wait for a few years, it may find Iran a much more conciliatory country, Stern said.
"What they are doing to themselves is much worse than anything we could do."
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