A leading Middle East oil and gas analyst has said that the uncertainty surrounding the recent Iranian elections could have severe implications for the country’s hydrocarbons industry.
Samuel Ciszuk, Middle East analyst for HIS Global Insight believes that the contested presidential election, which has caused large public demonstrations amid allegations of vote-rigging against Iranian President Mahmoud Ahmedinejad, could result in more projects being delayed and a further brain drain of Iran’s engineering talent weakening the country’s position even further.
“Although during his second term in office the president could be in a better position to strike a compromise with the international community over his country’s nuclear programme, it is likely that international sanctions will continue to cap the inflow of investment and technology for at least the first half of the coming term,” Ciszuk said.
“With domestic differences also acute—as the last few days’ demonstrations show—the government’s room for manoeuvre will be somewhat restricted, allowing it less time to politicise the oil and gas sector or reshuffle current priorities,” he added.
Iran is believed to be suffering declining oil production rates of between 4%-8% and much of the country’s vast reserves require expensive gas injection techniques that it has not got full access to due to international sanctions. Ciszuk believes this is becoming more and more apparent.
“Iran’s inability to access international technology and investment is becoming ever more visible through endemic project delays and internal inefficiencies in its oil and gas industry,” he said.
“Even at projects where IOCs have been instrumental in the development—such the StatoilHydro-led development of the South Pars field’s Phases 6-8—the shortcomings of Iranian contractors have held up delivery of the project for years.”
Ciszuk also believes that with Ahmedinejad’s re-election there is no end in sight for Iran’s problems.
“Iran’s international isolation is almost certain to continue for at least another year with President Ahmedinejad’s re-election, meaning that the oil and gas industry’s crippling lack of modern technology and know-how will also continue,” he said.
