Iran’s Oil Minister Javad Owji says the Islamic Republic needs some $80 billion in domestic and foreign investment to avoid natural gas shortage in winters.
On Tuesday Owji once again warned that the country would face a 200-million cubic meter daily shortage of natural gas this winter.
Speaking at a parliament session he said this amount is needed “in upstream and downstream to resolve the issue within the next three to four years,” something which is impossible due to lack of foreign investment.
Iran needs to develop its oil and gas sectors by technology from Western energy giants to boost production which is gradually falling. For instance, as natural pressure in the South Pars gas fields is dropping Tehran needs billions of either partnership deals or cash investments to build larger platforms to extract more gas.
More than 70 percent of Iran’s energy is supplied by natural gas and the South Pars field is responsible to provide around 75 percent of this amount, reiterated the oil minister underlining that the lack of investment to develop gas fields is the main cause of this shortage.
It was interesting to observe that Iranian officials and government-controlled media were claiming in August and September that as winter approaches in Europe, the West will need Iran's energy and might make more concessions in the nuclear talks.
Not only the oil minister but a host of other officials and local experts constantly highlight the need for foreign investments, but they have no say in the country’s foreign policy, which is the exclusive domain of Supreme Leader Ali Khamenei.
Director of Tehran Chamber of Commerce Investment Services says foreign investors are reluctant to enter a country in which even domestic investors cannot work and capital outflow is on the rise.
Speaking to ILNA News Agency, Faryal Mostofi said on Tuesday that apart from Western sanctions, lack of security in investment and economic freedoms in Iran have also dissipated investors’ enthusiasm to release funds, stating that Iran could become a suitable place for foreign investors if conditions were right.
Summarizing the reasons for the crisis, Mostofi added that “inflation, sanctions, mismanagement, corruption, and strict regulations” have forced even Iranians to invest their capitals in housing sector in countries like Turkey and the United Arab Emirates.
According to her, something between $30 to $100 billion capital has left Iran in the past ten years due to inability of government to control inflation, while countries like Afghanistan and Iraq have been able to fix it below five percent.
Since the Islamic Republic was established in 1979 Iran’s rate of growth has been relatively low averaging less than 3 percent per year, this comes as experts say it needs around six percent annual growth to solve its endemic unemployment problem.
It is not just the nuclear dispute and its resulting sanctions that prevent the involvement of Western firms, it is also Iran’s overall foreign policy as an anti-West ‘revolutionary’ state, with an unpredictable behavior and a closed economy.
Iran has the second largest natural gas reserves in the world, holding more than 17 percent of global discovered gas fields. However, without foreign investment and technology, it will become a natural gas importer while the US sanctions would not allow Western companies to have any business dealings with the country.