Economics of Exhaustible Resources

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Economics of Exhaustible Resources

• Abbas Maleki
• February 7, 2009
• Department of Energy Engineering
• Sharif University of Technology

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Preview

• 43-523
• Fall Semester 2009
• 3 units
• Sunday and Tuesday, 1030-1200
• Ibn Sina 14

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Introduction

• Earth was endowed with more than 3 trillion
  barrels of conventional recoverable oil
  resources.
• With heavy oil and shale oil, resource base rises
  to over four trillion barrels of oil.
• In the entire history of the oil industry, man
  has produced just one trillion barrels.
• There are plenty of oil but resources will be
  found in locations that will require new thinking
  and new technology in order to access them.
• The development of these new supplies will
  require substantial investments of both financial
  capital and human resources.

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Course Perspective

• We live in fascinating times.
• The role of natural resources in the functioning
  of an economic system has received attention from
  economists.
• Globalization has accelerated and is being hotly
  debated.
• Markets have not always worked the way many
  people expected.

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Future is not continuation of the past
necessarily
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Course Perspective (2)

• This course will deal with the new trends on
  global energy resources by examining the complex
  interrelationships of a range of actors
• Owners
• NOCs, IOCs
• Governments
• Regional Organizations
• Cartels
• IMF, World Bank and WTO
• Non-governmental organizations NGOs
• Social movements

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Main Topics

• Modeling
• Political Economy and Energy
• Iran
• Future Studies

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Lectures on Modeling

• Resources Allocation
• Externalities
• Intertemporal Equilibrium
• New Models on Ecological and Environmental Models
• Imperfect Competition
• Price Movements in Resource Markets

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Energy resource periphery
Energy demand heartland
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Lectures on Political Economy and Energy

• Dependency System of International Oil
• Process of Change
• OPEC Management
• Second Oil crisis
• Oil Price War
• Gas Exporting Countries Forum

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Lectures on Iran

• Iran has
• 1 of the worlds population,
• 7 of the worlds natural reserves including
• -10 of the global proven oil reserves
• -16 of the worlds natural gas resources.
• 130 b barrel oil (17 billion tons) 27
  trillion cm gaswhich means 3500 billions

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Iranian Gas Network in 2025
AZAR I
Caspian Sea
Neka /Rasht
IGAT I
AZAR II
AZAR III
IGAT VIII
Parchin/Mashad
IGAT III
IGAT IX Export
IGAT II
IGAT XI
LOOP
Export
IGAT X
IGAT VI
IGAT V
Persian Gulf
IGAT IV
IGAT VII
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Countries with Oil Reserves gt 1 bill. t and
Strategic Ellipse
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Oil and Gas Proven Reserves
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Caspian Oil Terminals and Neka
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IRAN Qatar The Major potential for Surplus Gas
in the Middle East

• Gas ReserveIran 29 TCMQatar 26 TCM
• 12 percent of the world gas reserves are situated
  in a circle with a radius of 150km and over 25
  percent of the world reserves is located in a
  circle with a radius of around 250km

Over one Third of the World Gas is within a
circle with Radius of 250 Km
12 of the World Gas
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Lectures on Future

• Future Studeis
• Scenario Planning
• Driving Forces

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What would be Iran after 20 Years?

• Irans 20-Year Perspective Document Says
• The first country in the region at economic,
  scientific and technology levels
• line of thinking, i.e. the prioritization of
  becoming an economic and technological power
  over other policy areas, is very evident in
  Irans 20-Year Perspective Document which has
  produced the first ever official long-term macro
  strategy of the Islamic Republic.

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The Main Targets of the Fifth Five-Year Plan
(2010-2015)

• Reaching a crude oil production capacity of 5.5
  mmb/d by 2010 and 7 by 2015
• Producing 900 mcm per day of natural gas by 2015
• Producing annually 20 billion petrochemicals
• Concentration on energy-intensive industries
  (with the aim of them consuming a minimal 100 mcm
  per day of gas), so as to promote added-value
  production.
• Attracting foreign investment and resources and
  providing them with the support necessary to
  achieve the needed 100 billion investments in
  the petroleum sector by 2015.
• Increasing refining capacity by about 1 million
  bpd, with a concentration on gas condensates and
  very heavy crude, with the ultimate goal of
  reaching 2.3 million bpd of refining capacity

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Strategies to promote Energy Security for Iran

• Education in all related fields
• -Energy Engineering
• -Energy Management
• -Energy Economics
• -Energy Security
• Looking to Europe
• Catalyst for Iraq Oil
• Oast Politik
• Playing with Hippopotamus
• Cooperation in Persian Gulf
• Exporting Gas
• Managing tensions with US

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Crude oil prices since 1861
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Texts

• Dasgupta, P. S. C. M. Heal Economic Theory and
  Exhaustible Resources Cambridge Cambridge
  University Press, 1993
• Spero, Joan E. Jeffrey A. Hart The Politics of
  International Economic Relations London
  Routledge, 1997
• Yergin, Daniel The Prize The Epic Quest for
  Oil, Money Power New York Simon and Schuster,
  1991