Sanctions to what end?

Sanctions and underinvestment have cut Iran’s oil production capacity by at least 300,000 barrels per day, depriving the country of billions of dollars of revenues.

The slow development of new oilfields and the poor condition of many existing wells have caused the fall, according to Iranian and western experts.

“Oil production capacity has dropped by probably about 300,000-400,000 bpd,” said a former senior official in Iran’s government. His figures were consistent with those of a western oil official. The period over which the dip has taken place is uncertain. Oil industry experts, however, say it has come about since Mahmoud Ahmadi-Nejad became president in 2005.

At that time, capacity was about 4.2m bpd; today it has fallen to about 3.8m or 3.9m. A major cause has been the government’s decision to sack many of the oil industry’s most experienced managers.

The latest figures issued by the central bank suggest that actual output is substantially below even the reduced capacity, with Iran producing 3.53m bpd during the second quarter of last year, compared with 4.1m recorded in 2005. Iran’s oil ministry has denied any fall in the country’s production capacity.


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