In recent months, Iranian President Masoud Pezeshkian, along with his deputies and other officials, have been frequently addressing the nation about the ongoing gasoline crisis and the country’s excessive fuel consumption. These repeated appearances seem to signal a coordinated effort to prepare the public for an imminent increase in gasoline prices.
However, this is not the only fuel crisis facing Iran. A similar, albeit less publicized, situation is unfolding with diesel fuel, while the situation with natural gas is even more dire. Iran, home to the world’s second-largest gas reserves, accounting for 17% of the global supply, is paradoxically struggling with severe gas shortages. Industries, including the country’s vital thermal power plants, are also grappling with these shortages.
A recent report by the state-run Etemad newspaper highlighted the gravity of the situation, stating, “Iran, despite its vast gas reserves, is suffering from a severe imbalance in gas supply.” The report cited that during the winter of 2022, the gas supply imbalance peaked at 315 million cubic meters per day, and estimates suggest that this figure could rise to 500 million cubic meters per day this winter.
The newspaper warned that if the current trend continues, Iran will only be able to supply gas for residential and public sectors in the near future. Power plants, petrochemical industries, and gas injection into oil wells will face severe shortages. The report urged immediate foreign investment in Iran’s gas sector, describing the situation as an emergency. Electricity, petrol, and diesel face similarly bleak prospects.
The root of the problem, as Etemad pointed out, is clear: Iran’s gas extraction, refining, and production industries are in desperate need of investment, but the government lacks the financial resources to make these investments. The regime’s priorities lie elsewhere. Much of Iran’s oil and tax revenues are being spent on regional conflicts in Iraq, Syria, Lebanon, Yemen, and Gaza, leaving little to invest in the country’s internal infrastructure.
Iran’s oil minister, Mohsen Paknejad, in response to the growing gas imbalance, proposed short-term solutions such as increasing production at the South Pars gas field and managing consumption. He also announced plans to expand gas imports and exchanges with Russia and Turkmenistan. However, forecasts suggest that these measures will not be enough to prevent a future gas shortage. Even with a $100 billion investment in boosting pressure at the South Pars gas field, by 2041, Iran’s gas production from this field will only meet one-third of the country’s needs.
The National Development Fund reported in February 2023 that a significant drop in gas supply is expected as early as 2025, with a continued downward trend thereafter. This grim outlook is largely due to the depletion of the South Pars gas field and the lack of investment in boosting production capacity.
While Iran faces domestic energy crises, it is investing in power plant construction abroad. One of Iran’s largest power plant construction companies, Mapna Holding, is currently building a massive power plant in Latakia, Syria. On November 16, 2023, Mapna’s vice president of marketing and electricity sales told IRNA that there is growing demand for power plants in countries such as Pakistan, Afghanistan, Indonesia, and Syria. Iraq and Syria, in particular, have been the focus of Mapna’s electricity export plans, and the company boasts about its success in satisfying Iraq’s electricity needs.
Moreover, the regime’s electricity export ambitions extend beyond these regional markets. In April 2024, Mohammad Allahdad, the vice president of transmission and foreign trade at Tavanir Company, revealed plans to expand electricity exports, even hinting at ambitions to sell electricity to Europe.
This contradictory policy of investing abroad while neglecting domestic energy needs is baffling. It is widely believed that one of the reasons for Pezeshkian’s appointment as president was to persuade Western investors to return to Iran. However, Supreme Leader Ali Khamenei’s strategy of funding regional wars and ignoring international red lines, such as involvement in the Ukraine conflict and supplying ballistic missiles and drones to Russia, has made Iran an increasingly risky place for foreign investment. No investor, state or private, would be willing to enter a country so deeply entangled in foreign wars and plagued by the threat of social unrest at home.
As a result, Iran’s energy crises—exemplified by the gas imbalance and the exhaustion of the oil industry—will continue to worsen. The lack of foreign investment is likely to persist, and the regime’s prioritization of regional conflicts over domestic needs will exacerbate the deterioration of the country’s essential economic infrastructure. In short, without a significant shift in policy, Iran’s energy sector will face increasing shortages and deeper crises in the years to come.
Source: irannewsupdate.com