Re: Don't Underestimate the Mullahs
- From: "thelasian" <thelasian@xxxxxxxxx>
- Date: 24 Aug 2005 10:03:53 -0700
The author, Gary Milhollin, was also trumpeting claims about Iraqi WMDS
not so long ago, and accused IAEA director Hans Blix of being
"irrelevant" for "failing" to find the non-existing WMDs in Iraq. Now
the same guy is lying about Iran.
The IAEA inspected the area which Iran had supposedly "scrapped the
underlying earth" and found no evidence of any such scraping.
Here are some FACTS:
The Fuel Behind Iran's Nuclear Drive
by David Isenberg
Asia Times August 24, 2005
http://www.atimes.com/atimes/Middle_East/GH24Ak02.html
Much of the argument over the intentions of Iran's nuclear program
revolves around a single proposition that goes like this. Given that
Iran
has huge oil and gas reserves, it has no need for nuclear power for
domestic energy needs and thus its nuclear program will be used for
nuclear weapons.
Like much so-called conventional wisdom, is this is a highly misleading
and debatable cliche?
Certainly, the fact that a state is pursuing a nuclear program per se,
even if it is a nuclear proliferator, is not always a cause for alarm
for
the United States. Earlier this year, the US announced an agreement
with
India (until recently a target of US sanctions, even under the current
US
president) to strengthen the utilization of nuclear energy in its
energy
mix.
The Foreign Affairs Select Committee of England's parliament said in
March
2004 that based on a study it commissioned, "It is clear ... that the
arguments as to whether Iran has a genuine requirement for domestically
produced nuclear electricity are not all, or even predominantly, on one
side."
Some US arguments against Iran "were not supported by an analysis of
the
facts", the committee added, noting that much of the natural gas flared
off by Iran - which US officials say could be harnessed instead of
nuclear
power - was not recoverable for energy use.
Consider the following points. First, Iran's energy situation today is
quite different from the late 1970s, when the shah's regime also
pursued
nuclear technology, a pursuit that did not seem so alarming to the West
at
the time.
David Kay, former head of the Iraq Survey Group, speaking in November
2004
at a forum sponsored by the Center for Strategic and International
Studies
said:
The first thing - of what we do know, and it's amazing how many
Americans seem to skate over this - the first nuclear reactor given to
Iran was given by the United States in 1967 - a five-megawatt trigger
reactor, research reactor, under the Eisenhower Atoms for Peace
Program.
Still operated ... The other thing that Americans forget is that in
1974,
the shah announced a policy of 23,000 megawatts of nuclear energy in
Iraq.
The US reaction? [Former US national security adviser and secretary of
state] Henry Kissinger beat down the door to be sure that two US
constructors, General Electric and Westinghouse, had a preferred
position
in selling those reactors. We did not say, "it's a stupid idea, why
would
you want to do that when you are flaring gas and you have immense oil
reserves?" We said, "That is very interesting; it's an example of how
the
Iranian economy is moving and becoming modern." Imagine in Iranian ears
how it sounds now when we denigrate that capacity. They remember. We
were
sellers of nuclear reactors and wanted to be sellers of nuclear
reactors
to the shah.
Consider that just a year or so prior to the 1979 Iranian revolution,
the
country was producing more than 6 million barrels a day of oil and its
domestic consumption was less than 10% of that output. Its annual
natural
gas production (almost all in the form of associated gas) was roughly
about 12 billion cubic meters of which some 9.5 billion cubic meters
was
exported to the Soviet Union and only 20% was consumed domestically.
Iran's population was about 35 million. Meanwhile, Iran had signed a
number of nuclear power construction contracts with France and Germany
and
was negotiating with others for additional ones. The stated objectives
of
these undertakings were to generate electricity and desalinate water.
But
according to the pre-revolution politicians there was also always an
attempt to explore the nuclear technology for military purposes. But
there
was no overt opposition to the shah's nuclear ambitions because of
friendly relations between Iran and US.
In fact, president Gerald Ford signed a directive in 1976 offering
Tehran
the chance to buy and operate a US-built reprocessing facility for
extracting plutonium from nuclear reactor fuel. The deal was for a
complete "nuclear fuel cycle" - reactors powered by and regenerating
fissile materials on a self-sustaining basis.
The construction of nuclear power plants in Iran has been contemplated
for
more than 30 years. The shah argued that hydrocarbon resources would be
too valuable to burn by the beginning of 21st century and most of
Iran's
electricity generation must be supplied from nuclear power plants by
then.
After the Iran-Iraq war at the end of the 1980s, the need for
electricity
generation for reconstruction of the war-damaged economy was evident
and
as the maximum export of hydrocarbon resources was to be achieved for
foreign exchange requirements, the attention was focused on rebuilding
the
Bushehr nuclear power plant.
Today, Iran has a population of more than 65 million and most people
are
choking from air pollution. The country produces some 4 million barrels
of
oil a day of which about 1.5 million are consumed domestically. Natural
gas production has skyrocketed and almost all of it is consumed
domestically and the share of natural gas of total energy consumption
has
more than tripled and a very significant portion of that is used to
generate power. Incidentally, utilization of oil or natural gas for
power
generation, though more benign than coal, is not pollution free.
A recent article in Foreign Policy journal noted:
Iran is the second-largest oil producer in the Organization of
Petroleum Exporting Countries [OPEC] and has the world's second-largest
natural gas reserves. But its energy needs are rising faster than its
ability to meet them. Driven by a young population and high oil
revenues,
Iran's power consumption is growing by around 7% annually, and its
capacity must nearly triple over the next 15 years to meet projected
demand. Where will the electricity come from? Not from the oil sector.
It
is retarded by US sanctions, as well as inefficiency, corruption and
Iran's institutionalized distrust of Western investors. Since 1995,
when
the sector was opened to a handful of foreign companies, Iran has added
600,000 barrels per day to its crude production, enough to offset
depletion in aging fields, but not enough to boost output, which has
stagnated at around 3.7 million barrels per day since the late 1990s.
Almost 40% of Iran's crude oil is consumed locally. If this figure were
to
rise, oil revenues would fall, spelling the end of the strong economic
growth the country has enjoyed since 1999. Plugging the gap with
natural
gas is not possible - yet. Iran's gigantic gas reserves are only just
being tapped, so Iran remains a net importer.
Second, as a sovereign nation Iran is entitled to make its own
sovereign
decisions as to how provide for its own energy needs. Under Article IV
of
the nuclear Non-Proliferation Treaty, member states are assured access
to
the benefits of civilian nuclear energy.
Iran is a resource-rich country and has all the rights to use its
resources as it sees fit. Among these resources there are several
uranium
mines whose energy contents cannot be overlooked. Expecting Iran to
disregard this valuable resource is irrational, not to mention that
taking
away that much energy from the free market is an irresponsible
proposition. On the other hand, helping Iran to extract, process and
use
this resource in a joint operation with the International Atomic Energy
Agency could help resolve many political as well as financial problems.
Third, the large oil and gas reserves that Iran possesses do not mean
that
Iran can use oil and gas at no cost.
It is not well appreciated that Iranian oil production has dropped from
a
peak of more than 6 million barrels per day in 1974 to about 3.4
barrels
per day in 2002. Years of political isolation, recurring war and US
sanctions have deprived the oil sector of needed investment. Iran's
share
of total world oil trade peaked at 17.2% in 1972, then declined to 2.6%
in
1980, but has since recouped to roughly 5%. In 2002, earnings from oil
and
gas made up more than 70% of total government revenues, while taxes
made
up about 20%. After the 1980-1988 Iran-Iraq war, the National Iranian
Oil
Company launched a reconstruction program to restore damaged fields.
Since
1994, production has averaged 3.6 million barrels per day, although
this
is still roughly half of Iran's 1974 levels. The government hopes that
foreign finance and technology will help raise Iran's output to 5.6
million barrels per day by 2010 and 7.3 million barrels per day by
2020.
In fact, the oil and gas that Iran has are almost as expensive as the
oil
and gas that other countries don't have. To be able to use oil or gas
as a
feed for an industry (eg power generation), Iran has to develop the
resources. Now, once developed and produced, from an economic point of
view, oil can be treated as a commodity, which has a value. The
monetization of gas is more difficult, but not if you have ready
markets
around you and also if you can use that gas to boost your oil
production
capacity. In fact, considering the reality that the majority of Iran's
oil
and gas reserves are in the south and the country's population centers
are
in the north, it makes more sense to export the oil and gas in the
south
(oil from the terminals and gas through pipelines and gas value-add
projects) rather than pump it to the north and translate it into
electric
power.
One example explains the logic of this argument - no one has so far
posed
the question why Iran actually buys oil from Caspian sources. The
simple
answer is that it makes economic sense: Caspian crude is closer to
Iran's
northern refineries and the utilization of Caspian crude in the north
frees up oil in the south for export. The only argument that can be
used
regarding Iran's oil and gas reserves compared to other countries is
the
fact that Iran has secure domestic supplies as compared to other
countries
that are importers of oil and gas. However, if Iran as a country
manages
also to secure its own indigenous supply of nuclear fuel, then the
equation changes and it becomes more of an economic evaluation.
With regard to its gas reserves, it bears noting that there are needs
for
gas in Iran that are much higher priorities than the construction of
gas
power plants. As academics William Beeman and Thomas Stauffer noted:
First, gas is vitally needed for reinjection into existing oil
reservoirs [repressurizing]. This is indispensable for maintaining oil
output levels, as well as for increasing overall, long-term recovery of
oil. Second, natural gas is needed for growing domestic use, such as in
cooking fuel and domestic heating (Iranians typically use kerosene for
both), where it can free up oil for more profitable export. New uses
such
as powering bus and taxi fleets in Iran's smoggy urban areas are also
essential for development. Third, natural gas exports - via pipelines
to
Turkey or in liquefied form to the sub-continent - set an attractive
minimum value for any available natural gas. With adequate nuclear
power
generation, Iran can profit more from selling its gas than using it to
generate power. Fourth, the economics of gas production in Iran are
almost
backwards, certainly counter-intuitive. Much of Iran's gas is "rich" -
it
contains byproducts, such as liquid-petroleum gas [LPG, better known as
propane], which are more valuable than the natural gas from which they
are
derived. Iran can profit by selling these derivatives, but not if it
burns
the natural gas to generate power. Furthermore, Iran adheres to OPEC
production quotas, which combine oil and natural gas production.
Therefore
Iran cannot simply increase natural gas for export to make up for what
it
burns at home.
Finally, there is another important strategic element to consider. Iran
derives strategic significance from its status as an oil and gas
exporter.
This is a status that Iran would like to maintain, and as such any
initiative that would maximize Iran's potential for hydrocarbon exports
has a strategic value for Iran.
David Isenberg, a senior analyst with the Washington-based British
American Security Information Council (BASIC), has a wide background in
arms control and national security issues. The views expressed are his
own.
.
- References:
- Iran the Model
- From: GWhyte
- Don't Underestimate the Mullahs
- From: GWhyte
- Iran the Model
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