Oil and gas reserves, as one of the key economic assets can provide wide range of growth and development opportunities in different sectors of the countries. Due to the continuous increase in global demand of energy, the importance of these sources will be duplicated. According to BP (British Petroleum, as one out of seven oil and gas “supermajors” in the world, is a British multinational oil and gas company headquartered in London, England), global energy can be classified into oil, gas, coal, nuclear, hydro and renewables by fuel. Global oil and gas proved reserves are shown in the charts below, respectively:
Based on latest information, Iran owns the biggest hydrocarbon reserves in the world with 9.3% of global proved oil reserves and 18.2% of global natural gas reserves. In this regard, the place of Iran among top ten countries are shown in the tables below:
Because of Iran’s numerous potential in oil and gas field, oil revenues have considered as one of three main parts of budget sources of financing. Before perusing oil revenues in budget for current solar year (20th March 2017-20th March 2018), the historical trend of production and consumption of Iran’s oil and gas from 1995 to 2015 are reviewed in the charts below:
The mentioned 15-year period can be categorized into four presidential terms which are: Rafsanjani’s era, Khatami’s era, Ahmadinejad’s era and Rouhani’s era.
In era of President Rafsanjani, the amount of oil production grew 38% since expanding international relations specially in oil and gas field. Another main point was increase in petroleum products’ exports to 250 thousand barrels per day on one hand and simultaneously, decreasing petroleum products’ imports from 134 to 76 thousand barrels per day on the other hand. In general, President Rafsanjani mainly concentrate on development of oil production and exports more than gas field. After him, President Khatami, developed South Pars gas fields and launched ten of them in a short period of time. Besides of the foresaid progress, oil field had slow growth. In the other words, the amounts of oil production and oil exports remained mainly unchanged but gas production increased 70%. In President Ahmadinejad’s period, the oil price hit 140 Dollars per barrel which was all time high. However, unfortunately there were not any particular plans in oil or gas fields. After that, President Rouhani has done the several executive plans in the field of increasing oil production, launching common fields of oil and gas and attracting foreign investors in oil sector.
Oil revenues, tax revenues and revenues of bonds’ sales are the major parts of budget sources in Iran. The historical trend shows that the share of oil revenues in total budget sources has usually been in the range of 30% to 40%.
Therefore, the price of oil, the rate of Dollar and the amount of oil production and export play key roles in achievement to approved budget and consequently to improve of the economic situation such as economic growth. The trends of above items in planned budget vs realized budget are shown in the table below:
It should be noted that increase in oil price doesn’t necessarily lead to better economic situations. If governments use the oil revenues in infrastructure projects, the national treasure shall be made. But using the foresaid revenues in current costs doesn’t have long-term benefits for countries. As it is shown in the chart below, trends of oil revenues and GDP growth haven’t been favorable in some years from 1960 to 2015 in Iran:
Source: www.worldbank.org & www.statista.com
Ultimately, Iran budget mainly depends on oil revenues because of having wealthy gas and oil sources.
Several major factors confirm that Iran’s planned budget for current solar year (1396) is in accordance with current conditions and also estimates of rates by experts:
- EIA (Energy Information Administration) anticipated oil price of around 54 dollars per barrel for 2017
- Increase in Iran’s oil production after JCPOA
- Improve of oil export’s volume
According to deputy minister of industry and trade’s sayings, hydrocarbon resources will be the main energy sources until 2050 and 5 countries of Persian Gulf including Iran, Saudi Arabia, Kuwait, Iraq and Emirates with 65 percent of global oil reserves will be the main producers of oil in the world. Besides of the mentioned bright prospect, JCPOA has smoothed the path towards more foreign investments and better international relations which will led to upgrade of technical knowledge and finally increasing oil production and exports.