375S. Zhukov (zhukov@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation;
O. Reznikova (rezxana@yandex.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation
Abstract. Iran is the fourth world largest holder of proved oil reserves, extraction costs of Iranian oil are comparatively low. Oil production dynamics in the country is sharply cyclical and these cycles are generated by political factors, exogenous to the oil sector. Peak in oil production was achieved in 1974 and for the last forty years Iran’s share in the world oil production is declining. The article reveals that among powerful exogenous shocks negatively affecting the dynamics of oil production in Iran there were unilateral and multilateral sanctions. The first sanctions against Iran were introduced by the USA in 1979. Since the middle of the 1990-ies sanctions have become a system. The long-term negative effects of sanctions substantially exceed the short-term ones. Largely due to the sanctions the technological level of Iranian oil sector remains very low. Global energy companies and banks prefer to reject interactions with Iranian counterparties due to the expanding practice of the extraterritorial regime of US sanctions that has transformed Iranian hydrocarbons into a “toxic asset”. Asia-Pacific countries, preserving oil import from Iran under the sanctions regime, got an opportunity to set very favorable for them terms of contracts. Iranian oil is bought with a price discount, for partially convertible and/or unconvertible currencies, often in exchange for a counter barter supply of goods. Expectations that non-Western oil companies would substitute for European investments have failed so far. Given the accelerating global race for monetization of hydrocarbon reserves and risk of forthcoming peak in global demand for oil there is a growing probability that a substantial part of commercially competitive Iranian oil reserves will remain in the ground.
Keywords: Iran, world oil market, sanctions, foreign investment, technological level, buy back contracts, new type of oil contract, US, European Union, China
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