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Wednesday, July 17, 2024

Iran’s Premature Announcement of Oil Discovery

On Sunday, President Hassan Rouhani said Iran has found an oil field with 53 billion barrels of reserves. However, this claim was corrected on Monday by Iran's oil minister who said the field only adds 2.2 billion barrels to the reserve.

Since the establishment of the Islamic Republic in 1979, Iran’s oil production has steadily declined due to inadequate domestic and foreign investments, and slow technological upgrades.

This trend seemingly took a turn when President Hassan Rouhani made the following statement on Sunday, “Despite America’s sanctions… Iranian workers have found an oil field with 53 billion barrels of reserves”. He added that it was a “small gift by the government to the people of Iran”.

The oil field in southwest Iran stretches over an area of 2,400 sq km (about 1,491 square miles) in the Khuzestan province and is around 80 meters (262 feet) deep, according to the Iranian leader.

However, Iran’s oil minister said Monday that the old field whose discovery was announced previously adds only 22.2 billion barrels to the country’s estimated crude reserves.

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Out of the amount at the site, only a tenth — 2.2 billion barrels — can be extracted due to technological limitations, the minister, Bijan Namdar Zanganeh, told reporters in Tehran.

The minister said the discovery added 22.2 billion barrels to the country’s oil reserves.

Iran is a founding member of the Organization of the Petroleum Exporting Countries (OPEC)

“Considering that there was already 31 billion barrels of oil (in the region), the in situ amount added is 22.2 billion barrels,” he said.

Due to the area’s “dense and stone material”, the amount that can be extracted is only “2.2 billion barrels, considering the current technology we have,” he added.

The discovery spans 2,400 square kilometres (926 square miles), according to a map Zanganeh showed journalists. It could potentially be expanded towards to southwest and east through further exploration.

The oil layer is about 3.1 kilometres (nearly two miles) deep, with an average thickness of 80 metres (yards).

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Iran is a founding member of the Organization of the Petroleum Exporting Countries (OPEC). It sits on the world’s fourth-biggest oil reserves, estimated by energy giant BP at 155.6 billion barrels of crude, and also has the second-largest gas reserves.

Yet the Islamic republic has struggled to sell its oil since US President Donald Trump withdrew from a landmark 2015 nuclear deal and reimposed unilateral sanctions on Iran.

The remaining parties to the accord — Britain, China, France, Germany and Russia — have worked to save it by finding ways to bypass US sanctions, but their efforts have so far borne little fruit.