Iran International
Fars news agency in Tehran has again brought up the issue of an energy crunch, arguing that Europe needs a nuclear deal with Iran not to "freeze this winter."
Fars, linked to the Revolutionary Guard, is not the only government-controlled media outlet periodically bringing up this issue, as Iran negotiates with the United States through the Europeans to restore the 2015 nuclear deal (JCPOA).
Once the deal is restored the United States will lift oil export sanctions imposed by former President Donald Trump when he withdrew from the JCPOA in 2018. It will also remove international banking restrictions also imposed as part of Trump’s ‘maximum pressure’ on Tehran.
But what Iranian media presents as ‘Europe’s freezing winter” has almost nothing to do with Tehran’s crude oil exports, except generally helping to bring down oil prices. Europe’s need to replace Russian gas is a specific issue on its own that Iran cannot help with at all.
There are two major reasons why a nuclear agreement now cannot impact Iran’s ability to export natural gas for the foreseeable future.
First is Iran’s huge domestic need that exceeds its current production capacity, and second is the absence of the infrastructure to export the gas as LNG.
Iran produces around 750 million cubic meters of gas per day, which is a considerable amount, but it has suffered from domestic shortages for the past three years as demand has risen and gas production has plateaued or decreased.
The huge domestic demand primarily comes from extraordinary low prices – a de facto fuel subsidy offered to the population more as a loft-over of the revolutionary days than any good reason. Some estimates say that Iran has sustained a loss of close to $300 billion in the past decade simply by selling gas cheap to domestic consumers. In the same manner, gasoline and electricity are extremely cheap in Iran. A gallon of gasoline is sold at the pump for around 22 US cents.
Natural gas production could have increased with exports in mind, since Iran has the second largest reserves in the world, but for close to 20 years successive government were unable to invest in boosting extraction. The reason for this was both international sanctions (2010-2015) and current US sanctions imposed since 2018. There are also US sanctions prohibiting American participation in Iran’s energy sector going back to 1996.
All these sanctions were imposed because of Iran’s nuclear program and they banned investments and critical technology that only Western energy giants could have provided for expanding production.
Even Chinese energy companies left Iran’s South Pars gas field in the Persian Gulf that can easily produce more than 10 percent of global needs.
Having fallen behind in gas production, Iran also never built LNG terminals to serve global markets, like its tiny neighbor Qatar has done. Building such terminals can take 3-5 years, even if a nuclear agreement is signed today and US sanctions are lifted. Considering the need to build larger gas platforms to boost production, the time needed for Iran to ship LNG to Europe is at least 7-8 years.
There are also political hurdles Tehran must overcome. Its most important strategic ally is Russia, which would not like Iran taking a big share of its European market. The Iranian government is talking about a “gas swap” with Moscow, which means Russia wants Iran to sell its natural gas.
If current European strategy of replacing Russian gas stays in place in the absence of a resolution to the Ukraine crisis, any gas deal with Iran would mean buying energy from Moscow.
The crisis which has seriously affected the everyday lives of the majority of the city’s nearly 600,000 population in the past few days, has been attributed to the critical depletion of the water in the Ekbatan Dam reservoir, with zero inflows.
With nothing in the pipes, water for drinking and other purposes is now being distributed by tanker trucks. Iran’s Red Crescent has also been distributing bottled water in the city.
A month ago, during a visit to Hamedan, capital of a province of the same name, President Ebrahim Raisi ordered the related authorities to solve the city’s water problem within two months.
In recent years, many cities across the country have been scenes of massive protests to the authorities’ mismanagement of water resources, harmful dam building, and politically motivated diversion of rivers that have devastated agriculture and drinking water sources. Also, there is rising temperatures and sand storms, expert attribute to global warming.
in July 2021 big crowds protested in over a dozen cities and towns in the southwestern province of Khuzestan where at least 700 villages were receiving regular supplies of water by tanker trucks.
In July 2021, Protests over water shortages in Khuzestan lasted for more than a week and it spread to several neighboring and nearby provinces including Chahar Mahal-Bakhtiari, Esfahan, Lorestan, and Bushehr.
Later in November water protests in the city of Isfahan, the capital of the central province of Esfahan, turned into anti-government unrest. Security forces cracked down on protesters with heavy handed tactics and many were injured by shotgun pellets.
Earlier this month, a large group of people in the city of Shahrekord in southwest Iran held a protest rally after nine days with no piped water. Officials said the problem stemmed from the recent flash floods in the region and the lack of any water treatment plant for the province. Water has been cut in Shahrekord, and four other cities due to the recent floods and increased water turbidity.
Ironically, despite a dam-building craze in the past 30 years, most of the water from this summer’s exceptional monsoon rains was lost in plains and deserts.
Iran is in the midst of a long drought that has become worse in the past couple of years. Ninety-seven percent of Iran’s land is arid or semi-arid.
The rapid growth in demand for water has led to severe depletion of available sources. The annual renewable water availability per capita reached a crisis level in 2021. Studies by the United Nations Development Program (UNDP) indicate that by 2040 Iran is likely to face a severe water stress level.
Several human factors, experts say, are contributing to the worsening situation: population growth, industrial demand, mismanagement of water resources including allocation to water-intensive industries, and planting many water-intensive crops including rice and sugarcane.
Steel mills are particularly blamed for draining available water resources. Most of Iran's largest steel factories are in arid regions such as Esfahan, Yazd, and Kerman provinces despite the very high water usage in steel production.
Critics blame Iran's development model, or lack of one, in the past few decades and unbalanced sectoral growth for much of the water crisis in the country.
Iran is also among the ten countries in the world that extract most groundwater and a hotspot of land subsidence induced by groundwater withdrawal.
Documents posted on social media revealed that some 125 Iranian media outlets have been receiving hefty sums of money from the MSP possibly to turn a blind eye on financial corruption at the company and its widespread financial conglomerate including several wealthy subsidiaries.
Earlier this week, the steel plant, with majority ownership by state institutions, was suspended by the Tehran Stock Exchange (TSE) following a scathing parliament report about an alleged $3 billion corruption case.
On August 22, investigative journalist Saba Azarpeik posted a ten-page list of individuals and legal entities on the MSP's payroll. The list includers several individuals linked to grand ayatollahs, as well as media outlets including the state television and hardline daily Kayhan which operates under the direct supervision of Supreme Leader Ali Khamenei. There were also journalists and newspaper publishers including some well-known reformist figures, state organizations including Iran's notorious Intelligence Ministry, and Friday prayer imams in scores of Iranian cities.
Social media users noted that President Ebrahim Raisi has ordered some of those involved in wrongdoings at the steel plant to be fired. As one user observed, "They are fired to leave the country and have a good time abroad with the windfall money. We expected some punishment, but apparently, no one knows what will happen to the people's money."
Iranian political analyst Mehdi Mahdavi-Azad said in an interview with Iran International TV that big corruption cases in Iran happen in the absence of supervisory bodies, free media, and an independent judiciary. He said there has been no contract whatsoever for some of the money paid to the media. Mahdavi added that some Twitter influencers were paid to deny any report on financial corruption.
Raisi said while commenting on the unusually big corruption scandal that "Despite financial corruption cases the regime comes clean." Political activist Asieh Amini told Iran International that "Officials have told the media to describe the case as organized corruption rather than systemic corruption to avoid generalizing the wrongdoings to the entire Iranian political system." Like Mahdavi-Azad, Ms. Amini attributed the corruption to lack of transparency of the legislative and executive bodies and the absence of free press and independent judiciary.
Amini said corruption appears quite natural in a non-democratic political structure. Raisi in a way denies the corruption because he knows that systematic corruption is so widespread in the Iranian political system that all parts of the government, the legislative and the judiciary branches contribute to it. She added that many major corruption cases in Iran since the 1990s have ended in a way that everything was swept under the carpet.
Economist Ahmad Alavi explained how a major economic conglomerate which is present in the stock market can be overwhelmed by financial corruption. He said, "The problem is that true privatization is impossible in Iran and the so-called privatized companies are being controlled by the elements linked to the regime and its key people. Even the smallest private companies are usually blackmailed and milked by security officials, IRGC officers and clerics such as Friday prayers imams."
Alavi added that "there are different forms of corruption in Iran including political, economic, judicial, security, and media corruption. Even the educational and sports systems as well as religious and political institutions are corrupt in Iran. In such a system, no company in Iran can evade corruption."