Via Gregor.us, an interesting examination of Iran’s recent announcements of new oil discoveries.  As the article notes:

“…People are usually shocked to learn Iran imports 50% of its gasoline. This effectively destroys a good portion of their export earnings from oil. Obviously, therefore, it would make sense for Iran to expand its domestic refining capacity. So do they? Well, it’s unclear.

Yesterday, Iran announced it had made a series of new oil discoveries. Whether these are reserve upgrades of previously known fields, or actual first-time discoveries we do not know. Iran State Radio threw the “billions” word around quite liberally in their announcement.

These kinds of declarations are not uncommon among the oil producing nations whose oil industries are dominated by a National Oil Company (NOC). I’ve seen these over the years from Saudi Arabia, and Mexico for example. Often, the declaration may actually refer to an expanded assessment of production capacity. Other times it’s a call on reserve additions. Very rarely, however, do these newsflashes refer to actual new fields–at least of any size. After all, these countries have all long since been explored.

Iran has been steadily producing about 4 Mb/day for some years now. What also intrigues is the country’s massive reserves of untapped natural gas. My question for a long while has been as follows: What has Iran been doing with all the capital from oil exports, that it did not spend on either expanding refining capacity, or developing its natural gas?

Some claim that Iran would have expanded its refining capacity were it not for multi-decade old sanctions. The assertion is that Iran has not been able to source the engineered materials and equipment required. And yet, my research shows that Iran has expanded its refining capacity moderately over the years. Furthermore, no one has adequately explained why Iran would find it easier to obtain the tools to explore nuclear development–but–not the tools to turn more oil into gasoline.

And yet, everyone does have an explanation. For Iran. And this is why Iran is a mystery. Because no one actually knows, but everyone has an explanation.

Let’s pretend therefore that Iran can source the materials to develop its oil, natural gas, and nuclear power to the fullest extent possible. And let’s further pretend those in the leadership are rational actors. So what would they do? My answer: before pulling talent into nuclear power generation development, it would make sense to 1. build refining capacity to capture more fully the earnings of oil exports. 2. develop natural gas reserves for power generation. 3. Migrate any remaining industrial use of oil or power generation use of oil, to natural gas.

Alas, this is not what Iran has done. In fact, it’s sacrificed alot both diplomatically and infrastructurally, all for the sake of the nuclear program. Perhaps Iran is not such a mystery after all.”