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Re: Report: Iran oil profits could dry up by 2015
I don't think it's foreign investment per se, but rather the technical expertise that some of the foreign investment brings (sometimes foreign investment is used interchangeably with foreign private investment from the majors, but this is misleading). The oil business has become increasingly complex from an engineering standpoint as they seek to maximize field production and as they continue to drill in fields under high pressure and extreme depths.
If we take a look at Saudi Arabia as the anti-Iran, then we can see that the Saudis use the expertise of the major oil companies while keeping them under their thumb. Russia is trying to do this as well, but I note that as Putin tried to bring the private investment and foreign private investment to heel, Russian oil production suffered. Russia would be producing a lot more oil nowadays, if it let companies like Yukos continue doing business. Yukos was trying to professionalize its operations -- both from an engineering and financial perspective -- by importing talent from Houston, which seemed to particularly incense Putin.
Overall, while I readily admit that some government-run operations are more efficient than others (compare the Venezuelan oil industry before Chavez to Iran's oil industry, f.e.), private industry will as a rule be more efficient than government-run institutions. And unregulated private industry will as a rule be more efficient than regulated private industry. A 25% decrease in efficiency of the government-run industry versus privately-run industry actually seems like not that big of a drop. So I suspect that the implied inefficiency is much greater.
In aerospace, another technical area with which I am familiar, the difference is much greater -- up to a 90% decrease in cost/price of space launch for US government versus private partially regulated. The US government versus Russian government is some 50%-75% decrease in cost/price. The US government space launch industry is a real white elephant.
Originally posted by KrazyHorse
What the **** is going on? Is it truly simply a case of loss of foreign investment? Why can't Iran manage to effectively exploit its reserves? What are they thinking, ****ing with something as important to their economy as the oil industry is? Does anybody have any insight on this? The article is sorely lacking in details on this aspect of the story.
What the **** is going on? Is it truly simply a case of loss of foreign investment? Why can't Iran manage to effectively exploit its reserves? What are they thinking, ****ing with something as important to their economy as the oil industry is? Does anybody have any insight on this? The article is sorely lacking in details on this aspect of the story.
If we take a look at Saudi Arabia as the anti-Iran, then we can see that the Saudis use the expertise of the major oil companies while keeping them under their thumb. Russia is trying to do this as well, but I note that as Putin tried to bring the private investment and foreign private investment to heel, Russian oil production suffered. Russia would be producing a lot more oil nowadays, if it let companies like Yukos continue doing business. Yukos was trying to professionalize its operations -- both from an engineering and financial perspective -- by importing talent from Houston, which seemed to particularly incense Putin.
Overall, while I readily admit that some government-run operations are more efficient than others (compare the Venezuelan oil industry before Chavez to Iran's oil industry, f.e.), private industry will as a rule be more efficient than government-run institutions. And unregulated private industry will as a rule be more efficient than regulated private industry. A 25% decrease in efficiency of the government-run industry versus privately-run industry actually seems like not that big of a drop. So I suspect that the implied inefficiency is much greater.
In aerospace, another technical area with which I am familiar, the difference is much greater -- up to a 90% decrease in cost/price of space launch for US government versus private partially regulated. The US government versus Russian government is some 50%-75% decrease in cost/price. The US government space launch industry is a real white elephant.
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