Kemp: Iran's Tantalizing Oil Prize

According to a report by the U.S. Bureau of Mines, the international consortium in Iran produced almost 430,000 bpd from just 113 wells in 1961, an average of more than 10,000 bpd per well, the highest in the world ("The Petroleum Industry of Iran", 1963).

Many of the old fields have been heavily depleted, but even today oil wells in Iran, as with Saudi Arabia, have much higher initial production rates than U.S. shale plays, and output declines more slowly.

The Prize

The first concession to explore for oil was granted to Paul Julius Reuter, founder of the eponymous news agency, in 1872. It was followed by various other concessions, none of which succeeded in finding commercial quantities of oil.

The first successful concession was granted to William Knox D'Arcy in 1901. After several dry holes, D'Arcy's company finally struck a gusher near an old temple at a location known as Masjed-e Soleyman in 1908.

Masjed-e Soleyman went on to become one of the country's most productive fields. Other giant and super-giant fields were discovered across Khuzestan and neighbouring provinces mostly between the 1920s and the 1950s.

Iran's oil and gas resources are prodigious and exceptionally attractive from an economic point of view, but the country's production history has been shaped by politics rather than geology.

The composite production profile produced here from the U.S. Bureau of Mines, OPEC and BP shows the impact nationalisation (1951), revolution (1979), war with Iraq (1980-88) and sanctions (2012) have had on output (


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