Giving a clear image of the achievements of an economic project is impossible without taking into account the peripheral effects. Major oil and gas projects leave a variety of economic, political and social impacts even on other countries. Apart from producing revenues, major energy projects can bolster Iran’s national security, create jobs, develop downstream companies at lower costs and reduce the environmental pollution.
The most significant results of oil and gas developmental projects are as follows:
Internal Stability
Development of upstream oil and gas sectors contribute to determination of a share for the countries in the energy market. Relevant deals produce more revenues thereby meeting the needs largely. Although twenty five years have passed since the 1979 Islamic Revolution efforts are under way for boosting non-oil exports which serve as a source of income for the country.
Regional Balance
The importance of economic constituents from a security standpoint has drawn anxiety from the countries. The countries compare their economic situation with the neighbors and that was why Iran’s National Security Council ruled in 1990 that Iran’s oil output should not be less than its western neighbor Iraq.
A fall in Iran’s revenues from oil production may endanger the economic stability and a remarkable reduction in Iran’s energy production share may pose foreign threats at national and international levels. In the meantime, cultural, economic, political and social bonds can prompt the countries in the region to increase their sense of competitiveness.
Due to meager investment in the gas sector, Russia cannot meet the future demands of Europeans and Iran, the second largest holder of gas reserves, can play a major role. The most economical option for a Central Asian pipeline to serve oil and gas swap is Iran thanks to its access to high seas.
National Security and Stability of Energy Supply
The security aspect of energy at the international stage is much different from its economic or developmental function. The collapse of the Union of Soviet Socialist Republics left an important impact on the analytical views of the economic constituents of national security.
Iran is well mindful of the 1953 US-backed coup against the popular government of Prime Minister Mohammad Mosadeq although the conditions are much different now.
Diversification of Non-Oil Exports
Petrochemical industry is a major oil sector and Iranian engineers are well specialized in this sector. Iran is moving to nationalize petrochemical industry. The products of petrochemical complexes are categorized in five groups: basic petrochemicals, polymers, aromatics, fertilizers and poisons and hydrocarbons. They feed on sweet and sour gas, light and heavy naphtha, liquid gas and phosphate powder. Gas resources are much more cost-effective than naphtha.
Iran’s National Petrochemical Company has 18 projects under way now. Estimated at 6.7 billion dollars plus 17.2 trillion rials, they are predicted to come on-stream in three years. They would yield nearly seven billion rials in revenues.
Iran’s petrochemical sector relies on gas industries. Gas accounts for more than 75 percent of the buy-back deals.
Economic Stability
Iran’s hard currency market has witnessed good stability in recent years. Fluctuations of foreign exchange rating have never jumped drastically. The impacts of buy-back deals should not be ignored.
Sustainable Employment
Upstream oil and gas sectors have created less jobs than other sectors but buy-back deals have accounted for sustainable job generation. Any industrial job costs nearly 5,000 dollars. In the oil sector, the figure reaches 10,000 dollars. Contractors feel obliged to recruit Iranian forces for development operations. Investing 14 billion dollars in the oil and gas industries can create nearly 600,000 jobs. Currently, development of phases of the massive South Pars Gas Field has so far created at least 13,000 jobs. The figure adds up to 150,000 taking into account indirect jobs.
Combating Deprivation
The geographical position of Assaluyeh Port in the south of the country where deprived provinces are located is noteworthy. Pars Special Energy Economic Zone has seen five petrochemical projects and many other infrastructural units are under construction.
Environment
Buy-back deals give the priority to clean fuel and gathering of associated gases should be carried out seriously. Development of South Pars Gas Field has given rise to environmental results.
Shared Fields
Nearly 70 percent of buy-back deals involve development of shared oil and gas fields. Iran should not lose the time in oil and gas recovery from the fields it shares with the neighbors or face the consequences.
Bolstering the Private Sector
Buy-back deals have set the stage for the presence of private companies in upstream oil and gas sectors. These companies bring in technological savvy and let the government gain more revenues. Petropars, Petroiran, Naftiran Intertrade Company, Iran’s Oil Engineering and Construction Company and IRITEC are the leading contractors.
Training
Buy-back deals can contribute to transfer of technological know-how. Contractors are obliged to train Iranian forces to a good level. At least 1.4 billion dollars is allocated to this end.
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