On 10 May, the UN voted for a new round of sanctions on Iran in an attempt to force it to comply with international demands over its nuclear programme. The sanctions have fallen short of the crippling measures sought by the US, and do not target investments in the energy sector, having been watered down by Russia and perhaps more importantly China.
Iran is China’s third largest supplier of crude oil, behind Saudi Arabia and Angola, exporting around 430,000 barrels a day (b/d). China’s Sinopec is set to award a series of engineering and management deals for the development of Iran’s Yadavaran oilfield by the end of June. Initially agreed in 2004, the progress has been slow on the project, which aims to increase production to 185,000 b/d over two phases.
The project’s delays have been symptomatic of Iran’s wider inertia on recent upstream energy projects. Tehran has re-prioritised its tightening financial resources to salvage strategic projects, while slowing or even shelving those deemed as having little chance of completing on schedule.
Iran remains first and foremost an oil-based economy. The more easily monetised revenue source, oil has traditionally been prioritised over gas. According to Iranian Petroleum Minister, Masoud Mir-Kazemi, the sector requires some $200bn over the next decade to prevent oil output from declining. Without significant investments and imported technology, Iran’s inability to deliver projects is likely to continue.