August 2011, No. 61

Exclusive 16th International Oil Show

Iran's Share in South Pars Equals

120 Years of Oil Export Revenues

Mousa Soori, new managing director of South Pars Oil and Gas company in an interview explained about special situation of South Pars gas field in the Iranian economy.

What makes South Pars important as energy capital of Iran?

South Pars gas field is one of the most important and most valuable economic resources and a unique national treasure. The Iranian part of the field is 3,700 square kilometers with 14,200 billion cubic meters of gas and 19 billion barrels of gas condensate. Based on the existing estimates, if every barrel of oil is sold for 50 dollars, the field is worth 4,400 billion dollars (if crude gas is sold) and if every barrel of oil is sold for 100 dollars, the value of crude products from the field will hit about 8,800 billion dollars.

To understand this, a review should be made of Iran's oil revenues in the past 100 years. Iran has earned 880 billion dollars in that period and if every barrel of crude oil is taken to be worth 50 dollars, that revenue can be updated to 3,600 billion dollars. As a result the value of the existing gas of South Pars field will be equal to at least 120 years of oil exports and sales (at 50 dollars per barrel). A more realistic estimate (with 100 dollars per barrel for oil) will upgrade the figure to 240 years of oil export and sales. If this huge national wealth is turned into petrochemical products to create added value in the country, its total worth will increase 5, 7, or even 10 times. If the value of crude oil accompanying gas in South Pars field is added, the true value of this huge national wealth will be unparalleled both in the country and even in the world.

The rival country is rapidly exploiting this shared trove and all opponents of Iran are supporting it. In addition to economic and financial value of the field, development of South Pars gas field and increased production of oil and gas from the field will lead to prosperity of many downstream and conversion industries, which in addition to Assaluyeh and Bushehr province will be a great economic impetus for other provinces by yielding intermediate products and feedstock for various production plants.

For example, the planned ethylene pipeline which will run for 2,500 km to cover southern and western provinces, can take economic development to other economic and industrial sectors of the country and can give great economic boost to those provinces. In addition to supplying about 50 percent of the country's consumed gas, South Pars is also providing needed gas for injection into oil fields in Khuzestan province. In addition, the field is providing valuable products for export to world markets which in addition to increasing gross domestic product also increase the country's trade balance. When 29 phases of the field are made operational, its effect on generating national wealth will increase rapidly and Iran may be able to earn, at least, 100 billion dollars and, at most, 200 billion dollars a year by selling South Pars products.

If economic and social importance of South Pars products in addition to job creation, oil diplomacy, increased bargaining power of Iran in international interactions, and increased clout in energy markets are added, economic, social, political and international importance of South Pars gas field will be more evident. Since Iran ranks the second in the world in terms of oil and gas reserves and is the second biggest exporter of crude oil among OPEC members, special attention should be paid to effect of oil and gas on energy security as well as economic, social and political security of Iran and the world. Energy, especially oil and gas play a special role in national security as well as economic, social and political stability of the world as no immediate substitutes to them are available.

Can South Pars be considered a production, economic, and scientific zone of the world?

Scientifically speaking, South Pars gas field is a totally productive and economic zone because all investments are made to produce oil, gas and petrochemicals. At present, all products and revenues of this zone result from production of oil, gas and petrochemicals and this is very important. I should also add that products of South Pars gas field are commodity; that is, they are not of service type.

Based on all scientific definitions in economics, South Pars is not only a production zone, but also a very important economic zone. Very important goods and products are yielded by this zone with high global demand for buying them. Therefore, South Pars enjoys high economic value. In addition, South Pars is the world's biggest gas reservoir. Economically speaking, that part of the field which belongs to Iran accounts for 8 percent of total gas reserves of the world (equal to 14,200 billion cu. m. of gas and 19 billion barrels of condensate) which is worth over 4,400 billion dollars (if every barrel of equivalent crude oil is sold for 50 dollars).

There are few economic zones in the world with the same area and value each of which are one of a kind in terms of production and economic worth. Economic production and productive economy are interrelated. All products with market value are economic products too. Meanwhile, the necessity of production efficiency and better management of resources increases economic value of South Pars gas field. If job creation and supply of needed fuel from South Pars is taken into account, it would be clear that South Pars products influence such macroeconomic indices as gross domestic product, national revenue, investment, employment, exports and fuel production. Under presence conditions, this is the most active investment area of the national economy.

How many projects are underway there?

At present, more than 48,000 billion tomans (about 48 billion dollars) worth of projects are underway in South Pars Oil and Gas Company alone (excluding petrochemical and other forms of investment). Each year, more than 12 billion dollars is added to that investment (amounting to 60 billion dollars in the next five years). Such huge investment in production is the most important proof to value of South Pars gas field and somehow alludes to its uniqueness in terms of economic value and production.

Therefore, South Pars gas field affects both micro- and macroeconomic indices of the country. Microeconomic indices include supply and demand, production, production costs, added value, production chain, major tender bids for goods and services, import of industrial goods, customs affairs and discharge of goods, loading and offloading, port affairs and shipping. It also affects monetary and financial affairs such as stock exchange and even the amount of liquidity and circulating money. Moreover, presence of a great number of specialists and prominent managers of the Iranian oil and gas industry at South Pars which has led to high-level technology transfer and managerial feats in the area of oil and gas production and development is another major index which attests to scientific value of the field.