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Dr Nursey Ghorban made a speech to Iran's Economists Society on July 1995 raising three major questions concerning "the Size of Iran's petroleum and gas deposits; "the long-term role of Iran in view of the present global circumstances and the prevailing oil and gas situation"; and "the problems that Iran will face on the way to play her ideal role."

In the past, the region included the middle East and, to some extend, India and Pakistan. Recently, following the collapse of the Soviet Union, the region has enlarged since Central Asia and the Caspian sea region, which yield gas and oil fields have, joined the region too; and Iran has consequently found a new position.

1- What do we hold in terms of gas and petroleum?; What is the size of our reserves? and what is the number of our plants and refineries?

2- Given the present global circumstances and the prevailing gas and petroleum situation, what could be the role of Iran in the long run?

3- What problem are we facing on the way to play the ideal role? How could we handle these political, cultural, technological, economic and other problems? And what strategies shall we appoint?

The Overall the deposits of our ground fields, including recycling and the like, used to be nearly 95 billion barrels, the remaining of which are around 55 billion barrels now. The deposits of our sea fields also used to be around 17 billion barrels, of which the remaining are now near 14 billion barrels. In other words, the reaming deposits of our ground and sea fields are nearly 69 billion barrels on the whole . However, we can obtain 20 to 40 Billion barrels more by means of reinjecting and exploring new fields in the next few years. The oil companies whose previous estimations have not always been correct have often come up with figures higher than expected before. Taking this possibility into account, we have estimated our oil deposits to be around, 100 billion barrels.

At present, Iran's potential for producing oil from her ground and sea fields is nearly 3.6 million barrels per day which can increase up to 4.5 million barrels by the year 2000, after new oil fields are explored. The capacity of Iran's refineries is presently around 958 thousand barrels per day, and this amount may rise up to one million and 700 thousand barrels provided Bandar Abbas and other refineries are added to the present refining capacity. If the domestic consumption increases, we may go short of even this amount (one million and 700 thousand barrels) so far as nothing may remain for export; however, if we can control our consumption, we may be able to export 400 to 600 thousand barrels in future.

Our country is rich in gas deposits and we hold the first rank in the region in this regard. The British Petroleum magazine has estimated the amount of our gas deposits at 21 thousand billion cubic meters. The Shell Company has also estimated our gas deposits to be around 19 thousand billion cubic meters. Therefore, our gas deposits are considered to be about 20 thousand billion cubic meters. At present, our gas production is very low, amounting to nearly 80 billion cubic meters per annum, which is supposed to rise up to the amount of 130 to 140 billion cubic meters per annum. Of course, near 12 billion cubic meters of our gas supplies are burnt annually which is expected to account for 10 percent of the gas production by the end of the Second -Five-year Plan.

Iran has historically proved to have a rich and dominant culture intrinsically. The size of our population is remarkable as compared to that of the region. This population is growing and is made up of a young active force which can be used as a good wealth of workforce if properly trained and educated.

As to the oil, we used to play our previous role merely within the framework of OPEC and the Middle East. But at present, we can play a significant part in the region and in the world. We have access both to the Persian Gulf and the Caspian Sea region, And the Central Asian countries have access to the Persian Gulf and open seas through Iran, and to the Mediterranean Sea through Turkey. The Black Sea faces transport and other difficulties due to the Bosphorus Strait and its own problems. Therefore, we have a special geographical situation of which we can take much advantage. Our role in the Persian Gulf is clearly defined and has long been discussed.

The International Energy Organization expects Kazakhstan to export nearly one million barrels per day by the year 2005. Azerbaijan is expected to export 500 to 600 thousand barrels per day too. The consortium contends that it can proceed with the production and tends to export nearly 80 thousand barrels per day from the second half of this year until 1997, and will export around 300 thousand barrels in 2004 and 700 thousand barrels in 2010.

The pipeline's construction will probably be finished by the year 2003, by means of which they will be able to export 200 thousand barrels per day. And if the pipeline went through Iran's territory, we will gain much greater economic power and will be able to bring in earnings too; for by any route other than Iran's Territory it would cost them about 3 USD per barrel. They can use three routes to pass the pipeline; (1) through Groznyy and chechnya to the Black Sea, (2) from Baku to Georgia and to Tabriz and then to Anatolia, (3) from Bandar Anzali to Tabriz and Tehran refineries. Regardless of the political issues, the Iranian territory is the most economical route. In the long term, they are making plan to pass a pipeline to the "Seyhan " port in Turkey which would cost them nearly 3-4 billion US dollars.

If this oil is sent to Tehran and Tabriz refineries, almost 300 thousand barrels per day will be refined, and the refineries in Arak and Isfahan will be able to refine nearly 150 thousand and 200 thousand barrels per day respectively. In return, we can supply them with oil from The Khark Island and the Persian Gulf. By the benefit thus achieved, there will be not need to cross any pipelines and they will have access to the Far Easr markets. And because of the competition between Libya, Algeria, Syria, Egypt, Iraq and the like, the Mediterranean Sea is not a suitable place for the oil supply where as by the Persian Gulf one can have access to the markets which have good prospects for growth in future.

Any how, this is an ideal occasion for us to supply Iran's north refineries with oil without having to pipe oil to the north; which, of course, involves the risk of sudden break in oil supply from Azerbaijan and..., as well as the risk of political and security problems. Nevertheless, it yields earnings for us and in any case it suggests a proposal and a way how to play our role in the region.

In respect of gas, we will have a more significant role in the region. The Shell Company says that Iran's gas deposits is 14 per cent of the world's gas deposits and nearly 50 per cent of the Middle East's. But in Iran, gas has received less serious attention than oil. The pipelines that will pass across the Middle East in future, will have great significance in the 21st century because, The Middle East holds around 30 per cent of the world's gas, and Russia and the Central Asia hold almost 40 per cent of the world's gas. And Iran, due to her geographical situation, can link 30 per cent of the world's gas in the Middle East to the 40 per cent of the world's gas held in Russia and Central Asia. Thus Iran can link 70 per cent of the world's gas. In this situation, long-term plans may be envisaged to pipe the gas to the Middle East pipelines so as to be supplied to other countries. Therefore, we can play a significant part in this regard; our position as the most important gas transport agent in the Middle East is well established and we should preserve this position for ourselves.

Iran-Europe pipeline is one of the current projects under discussion. Some pipelines and plans are already envisaged to supply gas to Europe, and there is a project to cross a pipeline from Turkmenistan towards the south of Tehran; different phases of this plan have been under discussion for which some contracts have been signed. A further project is proposed by a Japanese company on a ring-shaped pipeline around the Middle East. As to the project discussed in the Studies Bureau, we are planning, in the first phase, to link Iran's gas network to Armenia, Turkey and Turkmanistan's gas networks by a series of short pipelines (up to 200 km.). In the long term, the question of Pakistan, India and Europe are the main concerns because in a period of 15 years we can establish a pipeline network in Iran to provide gas to India and Europe and to receive gas from countries like Turkmenistan, Qatar and so on. Also, many countries such as India, Pakistan, Armenia, Europe and Turkey may be supplied with gas by this network.

If these changes take place by the 21st century, the role of Iran would be to the next generation's benefit. In view of our gas deposits, we may take several important steps. We may use gas for domestic consumption to replace oil, petrol and etc. We have been using 55 per cent of oil and 32 per cent of gas to provide our energy requirement so far. We should try to reverse this ratio so as to use gas rather than oil for our domestic consumption as much as possible. This is one of the most important steps we may take for the future of our country. Hence we should consume gas instead of oil and try to sell the oil to raise our foreign exchange revenue. The price of gas is not very high in international markets and gas export involves problems and requires great investments, for the time being; at present oil is more economical to export than gas. In an ideal situation, Iran would have the biggest gas network in the region and would be the most important country for the export of gas and oil, and our gas and oil deposits would become tremendous if they are developed.

A major problem in the improper consumption of energy in Iran which has long been argued. The amount of gas we consume in Iran is nearly equal to 600 thousand barrels and the consumption of oil is one million barrels per day. In case we can reverse this ratio and use more gas instead of oil, we would have done a great positive task. We are consuming energy more than India does with her one billion population. Indonesia with a population three times greater than ours, consumes 700 thousand barrels per day. If we proceed with this trend, in the next ten years we will face an essential problem of having no oil for export at all and we will have to use oil at home!! A further problem is the necessary financing for further production of oil and gas which requires foreign investment; but our regulation is not yet conditioned to the inflow of foreign capital for investment, and we must face this problem. Another difficulty is the lack of sufficient training institutes for oil and gas through out the country.

One of the major problems outside Iran is "Our role in OPEC." OPEC is gradually weakening and so is the role of Iran in OPEC; in other words, OPEC and our position in OPEC both have their weaknesses. OPEC has weakened due to the speedy rises of oil prices, frugality of the oil consuming countries, the production increase in non-OPEC regions, and so on and so forth. Because of the Iran-Iraq war, the two OPEC members clashed, and destroyed the oil plants of each other, and .... . The Iraq -Kuwait war, too, had a great impact on the OPEC role. The embargo on Iraq by all countries and, mainly, the OPEC members had also a tremendous effect and brought uncertainties about the objectives of OPEC. One of the means of strengthening OPEC, is a general agreement on oil with Saudi Arabia; for if such a contract is made with Saudi Arabia, it would pave the way for agreement with Kuwait, Emirates, and so on. And we may take other steps to provide for cooperation of other countries with OPEC. An other alternative is to change the role of OPEC and its mandate to pave the way for new memberships, and to make efforts to bring about fundamental changes in OPEC.

Russia, which is a member of the Security Council, may be admitted into OPEC and other new members may be admitted too. An issue that would affect the prices, is the agreement on how to return Iraq's oil to the market again. Even if the members tentatively announce that they will reduce their share to such-and-such amount so as to admit Iraq to the market, this issue will affect the market. Recently, when President Rafsanjani talked to Fahad on phone, we saw that it did have an impact on the market, and the price of oil jumped by one to two dollars; this was due to the impression that the concerned countries might become closer to each other. We also have a further difficulty concerning the price of oil. The trend of the OPEC's oil prices from 1970 the 1990 (based on 1990's USD) shows that the price has often been set around 10 to 12 US dollars. According to the experts, this is the price that we will face in future too and, only occasionally, we may face price fluctuations between 12 to 20 US dollars.

The trend of the OPEC's per capita income from 1970 to 1990, also, indicates that the OPEC'S income has returned towards 1970 again. The OPEC's production and the demand for the OPEC's oil show that there is little probability that the prices will go up sharply, rather they are likely to increase gradually. Another issue which assumes great significance, is the problem of foreign investments. This has its own trend and has nothing to do with such statements as: "the gates have been opened," or "the gates have been closed" and what-so-ever; because a foreigner is interested in profit and if he feels that he may make profit, he will come, otherwise he will not. Therefore, we must account for scientific aspects of financing and pay attention to it more carefully; yet, we have done nothing significant in this regard so far. In view of some 100 billion barrels of oil that we hold, if we sell them out at 15 US dollars per barrel, the share of each Iranian, including the children, grandchildren and next generations, would totally amount to 30 thousand US dollars only!! Therefore, it is not oil and gas that should maintain us and the next generations, rather the way we and the next generations manage to use these resources will indeed lead us to advance better. And we should find the means to use this gifted wealth in a way to provide for the promotion and infrastructural development of the economy.

In view of the legal status of the Caspian Sea, it is worth mentioning that in a conference held in Kazakhstan, all the Caspian Sea countries attended and expressed their views. Russia asserts that the Caspian Sea is still held in common and controlled under the legal status based on an agreement signed between Iran and Russia in 1921 and 1940. The Russians argue that the two nations that had previously made the contract have recently been changed in to five nations, and that the legal status does not necessarily changes and remains as it used to be, and if a new legal status is to be established, the five nations should sit down together and negotiate, and Russia is very serious in her view.

Azerbaijan and Kazakhstan hold that the Caspian Sea should be divided by some border lines among the five nations, and, like the open seas, they should be bordered on the sea sides by a middle line and ... And in view of the Iran-Russia agreement, they argue that this was indeed a border- line agreement and the border was a line between Astara and Hossein Gholy, and Iran and Russia did not go beyond their lanes; hence at that time, too, there was indeed a borders. If Iran asserts that there was a border, then Kazakhstan and Azerbaijan will refer the issue to international organizations. However, if Iran states that Caspian Sea was held in common, then Iran and Russia have asserted that it was held under joint ownership; hence the two nations have changed into five nations, and it should still be held under joint ownership. Therefore, the Iran plays a very important and decisive role.

The price of gas depends on many factors. Gas unlike oil cannot be produced and loaded on board as to be sold at a certain place... the gas that is held at the southern Pars and Kangan cannot be sold to America and Japan, It gas should either be changed into liquid gas or should be piped in to pipelines and..., all these processes require financing, and governments state that development of the gas production projects depend on the consumption market; in other words, at first, they have made a contract with Japanese companies. That is to say, the sale contract precedes the gas production. Generally, every one million BTU in the United States costs about 2 dollars, where the same amount is worth 3 US dollars in Europe and 3.5 US dollars in Japan. So, the price of gas depends on the volume of investment and contracts as well as the facilities of both the consuming and producing countries. The production cost for every one million BTU is around 60 Cents.