The furor in Washington over possible nuclear weapons development in Iran is fueled in part because Bush administration officials claim that Iran doesn’t need to generate nuclear power. They assert that Iran’s nuclear energy program is unnecessary given its oil reserves. Therefore, officials say, its nuclear plants must exist for weapons production.
In fact, for Iran, generating nuclear power makes sense. Moreover, the plans to do this were started decades ago, and with American approval.
Ex-CIA director James Woolsey, in an interview on the PBS program Frontline on Feb. 23, claimed “there is no underlying [reason] for one of the greatest oil producers in the world to need to get into the nuclear [energy] business.”
At first glance, such logic seems sound. Countries with vast oil reserves also have large reserves of natural gas sitting on top of those reserves. Some years ago, the natural gas was regularly burned off to get at the oil beneath. However, technological advances today make it feasible to use this gas for power generation.
Even so, nuclear power still makes sense in a country with vast amounts of natural gas, particularly given the unusual circumstances in the Iranian hydrocarbons industry. There are needs for gas in Iran that command much higher priorities than the construction of gas power plants.
First, gas is vitally needed for reinjection into existing oil reservoirs (repressurizing). This is indispensable for maintaining oil output levels, as well as for increasing overall, long-term recovery of oil.
Second, natural gas is needed for growing domestic use, such as in cooking fuel and domestic heating (Iranians typically use kerosene for both), where it can free up oil for more profitable export. New uses such as powering bus and taxi fleets in Iran’s smoggy urban areas are also essential for development.
Third, natural gas exports—via pipelines to Turkey or in liquefied form to the subcontinent—set an attractive minimum value for any available natural gas. With adequate nuclear power generation, Iran can profit more from selling its gas than using it to generate power.
Fourth, the economics of gas production in Iran are almost backwards, certainly counter-intuitive. Much of Iran’s gas is “rich”—it contains by-products, such as liquid-petrolem gas (LPG, better known as propane), which are more valuable than the natural gas they are derived from. Iran can profit by selling these derivatives, but not if it burns the natural gas to generate power. Furthermore, Iran adheres to OPEC production quotas, which combine oil and natural gas production. Therefore Iran cannot simply increase natural gas for export to make up for what it burns at home.
Overall, therefore, it can reasonably be argued that natural gas in Iran has economic uses that are superior to power generation, in spite of Iran’s much-touted large reserves. The economic rationale is therefore plausible—the costs of gas versus nuclear power generation are sufficiently close that the choice is a standoff, especially given the reported bargain price for the Russian reactor.
The great irony in America’s accusations is that Iran’s nuclear program was first developed on the advice of American specialists, who urged the government of the Shah to begin producing nuclear power in order to save oil reserves for more lucrative purposes than fuel. The prospect of an industrial base built on petrochemicals and pharmaceuticals never materialized, but the nuclear power program continued unabated.
Now, to have American officials express alarm over the exact same program is illogical at best and utterly disingenuous at worst. Much of the criticism of Iran’s nuclear program comes from the same people who insisted that Iraq had an active nuclear weapons development program before the American invasion of that nation on March 19. That fact alone should raise severe skepticism throughout the world.
Thomas Stauffer is a former nuclear engineer and a specialist in Middle Eastern energy economics. William O. Beeman is director of Middle East studies at Brown University. Both have conducted research in Iran for more than 30 years.