Production and Reserves
In 1986 Iran's reported crude oil reserves of 48.5 billion barrels
ranked behind only those of Saudi Arabia, the Soviet Union, and
Kuwait. By February 1987, the NIOC estimated that Iran's recoverable
oil reserves had nearly doubled from the 1986 level to 93 billion
barrels, a figure that could not be verified by outside specialists.
In the first half of 1986, Iran had produced 1.9 million bpd of
oil, of which 800,000 bpd went for domestic consumption and 1.1
million bpd for export. Production dropped during 1986 as a result
of the oil pricing crisis and the bombings of Khark Island and
Sirri Island. By early 1987, oil exports had increased and neared
the level set in OPEC's December 1986 agreement, averaging 1.5
to 1.7 million bpd.
Iran made strides in the development of the gas industry as well,
with efforts dating back to the 1960s. One area of emphasis was
the extraction of "associated" gas, natural gas found in solution
with oil, which previously had been flared. In 1966 Iran reached
agreement with the Soviet Union to deliver up to 28 million cubic
meters of gas per day. In return, the Soviets committed equipment
and expertise to build a steel mill, an engineering plant, and
other related facilities. In 1966 the government also formed the
National Iranian Gas Company, a wholly owned subsidiary of NIOC,
to produce gas for both domestic consumption and export. By October
1970, the Iranian gas trunkline had been completed, capable of
moving gas from the southwestern Iranian oil fields to the Soviet
border at Astara on the Caspian Sea. Spur lines branched off the
trunkline to major Iranian cities, supplying gas primarily for
industrial use. Pipeline capacity reached 45.3 million cubic meters
per day by 1975. Iran had made a heavy investment in developing
the gas industry by 1977, anticipating a decline in oil production
in the early 1980s.
Gas production increased from 20 billion cubic meters in 1980
to about 35 billion cubic meters in 1985. Much of this increased
production, however, was flared (an inefficient but inexpensive
process), peaking in 1982 at over 50 percent of gas produced (14.2
billion cubic meters flared of 24.5 billion cubic meters produced),
largely as a result of Iraqi destruction of facilities for producing
and reinjecting natural gas. Recovery of natural gas improved
thereafter, with flaring accounting for less than 22 percent of
production in 1984 and 17 percent in 1985.
The development of the Iranian gas industry was bolstered by
the discovery of several natural gas fields in 1973 and 1974.
Reserves in 1974 stood at 7.5 trillion cubic meters, and by 1977
known natural gas reserves amounted to 10.6 trillion cubic meters.
According to Iranian sources, natural gas reserves in Iran were
the second largest in the world at 13.8 trillion cubic meters
in proven reserves as of 1987. This was more than the combined
reserves of the entire Western world. Additional gas deposits
were discovered in Baluchestan va Sistan Province in August 1986.
Only Soviet reserves, estimated to be some 3.5 times larger, surpassed
Iran's. Despite its enormous reserves, Iran exported no gas from
1980, when a pricing agreement with the Soviet Union was canceled
and the gas trunkline to the Soviet Union was closed, to 1986.
Because the Soviets refused to pay Iran's price, Iran turned its
gas reserves to domestic industrial, commercial, and residential
use. In August 1986, Iran announced that it would resume the export
of natural gas to the Soviet Union, with the expectation of returning
eventually to the previous export level of 10 billion cubic meters
per year. Subsequently, the resumption of natural gas export was
postponed and no deliveries had occurred as of the end of 1987.
Data as of December 1987