Iran sits atop the world’s second largest proven reserves of gas but remains a small player in terms of exports. The fourth round of sanctions imposed by the UN Security Council on 9 June, were aimed deliberately at targeting that vulnerability.
Tehran has responded by announcing it will offer $3bn in domestic bonds to help finance the development of its South Pars gas field, one of the largest in the world.
It has already sold $1.5bn of these planned bonds ahead of schedule. The total $3bn was intended to be offered over six stages, with the first portion of the bonds offered on 21 August, followed by a second offering on 11 September. The success of the first offering led the government to bring forward the sale of the next two portions to 5 September and they had fully sold out on 6 September.
Tehran also plans to offer another $3bn in foreign currency to speed up the development of the field. However, the bond issuance will not be able to make up for the technical expertise that international firms bring to the table.
Development of the field has already been repeatedly delayed over the past few years as several international companies have reconsidered energy ties to Iran.
There are signs that Iranian companies are struggling to meet the full sweep of the sector’s development needs. In July, Khatam al-Anbiya the engineering arm of Iran’s Islamic Revolutionary Guard Corps, partially withdrew from developing their part of the South Pars field.
The government has said it needs $200bn in investments in the energy sector by 2015, a financing gap that Iran will not be capable of plugging single-handedly.
Tehran needs to end its deadlock with the West if it is serious about increasing its gas production and ensuring its economic growth remains on track.