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Iran 'needs nuclear power'

27/12/2006

Iran could run out of oil to export in eight years without significant investment in infrastructure, according to a new study.

The report, published by the US National Academy of Sciences, suggests that Iran's nuclear programme could be a "genuine" opportunity for investors as oil production has failed to bridge oil field losses and domestic demand growth.

Roger Stern of Johns Hopkins University in Maryland said: "I'm not saying that Iran will have no oil in eight years. I'm saying that they will be using all of it for themselves."

The data published in the Proceedings of the National Academy of Sciences said Tehran could become "politically vulnerable" from the decline in exports as these account for about 70 per cent of government revenue.

"It therefore seems possible that Iran's claim to need nuclear power might be genuine, an indicator of distress from anticipated export revenue shortfalls," Mr Stern said.

"If so, the Iranian regime may be more vulnerable than is presently understood."

He went on to say that energy subsidies, hostility to foreign investment, and inefficiencies of state-planned economy were at the root of Iran's energy problem.

Oil exports are forecast to decline by ten to 12 per cent annually, he added, while within five years oil exports could be less than half their present level.

Iran earns about £30 billion (£15.3 billion) a year in oil exports.

The Islamic republic produces about 3.7 million barrels a day, some 300,000 barrels short of the quota set by oil cartel Opec.

On Saturday Iran vowed to continue its uranium enrichment programme despite the implementation of UN sanctions. The Middle Eastern country has repeatedly insisted that its atomic programme is entirely peaceful and motivated by the need to secure domestic energy.

But western nations have claimed that the programme is a front to acquire a nuclear arsenal because Iran has the second largest gas reserves in the world.

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