On 16 August 2017, Iran and China met in a joint Economic Commission to discuss China's role in acquiring oil reserves in the Al-Ahwaz region of Iran, which is home to millions of indigenous Ahwazi Arabs. Despite living in one of the most oil rich regions of Iran, the indigenous people continues to live in poverty and fear of persecution under the Iranian regime. There is concern that China's intervention will continue to ignore or even worsen the ethnic discrimination and poverty faced by Ahwazi Arabs. This concern is reinforced by the Iranian government’s refusal to consider the region’s parliamentary representatives’ appeal for the contracts with China to include redistribution of oil revenue to the Ahwazi.
Resource grabbing in Ahwaz will be the central theme of the
16th Iran-China Joint Economic Commission meeting, which starts today in
Beijing.
Oil is central to the Iranian regime's security. Under
international sanctions, China offered an economic lifeline, raising its trade
to over US$50 billion from 2014 - a rapid change from the US$300mn reported in
the mid-1990s.
Oil exports have been the crucial to relations between the
two countries, totalling 500,000 to 600,000 barrels per day in 2015 at an
estimated value of US$7-8 billion. Revenue was at least twice this level when
oil prices were high and trade was unimpeded.
Following sanctions, Iranian oil exports are booming,
reaching 1.7 million barrels per day in March. Most of this oil is pumped from
the Ahwaz region, the first oil producing region in the Middle East. None of
the revenue is directly transferred to assist with alleviating endemic poverty
among the indigenous Ahwazi Arab population, which numbers four to five
million. As such, the development of the Iranian economy and the stability of
successive regime has always required the impoverishment, displacement and
persecution of Ahwazi Arabs.
Iran holds the world's fourth largest oil reserves. Onshore
reserves account for 70% of Iran's reserves and 80% of these are located in the
Ahwaz region. The three largest oilfields in the Ahwaz region are: Marun (22
billion barrels), Ahwaz (18 billion barrels) and Aghajari (17 billion barrels).
China is in an aggressive drive to acquire these resources.
Last month, Chinese oil producer Sinopec announced it would undertake the
development of Phase II of the Yadavaran field, which is partly shared with
Iraq and currently yields 100,000 barrels per day of oil. Yadavaran is 70km
southwest of Ahwaz. Phase II will increase daily output to 180,000 barrels,
worth up to US$3 billion per annum. Yadavaran field alone is estimated to
contain up to 31 billion barrels, potentially worth around US$1.5 trillion.
The China National Petroleum Corporation (CNPC), which owns
oil company PetroChina, is also involved in Phase I of the North Azadegan
project, which is expected to yield 75,000 barrels per day. CNPC has agreed on
a US$2 billion deal to eventually expand daily production to 120,000 barrels.
It is already the operator of the Masjed-e Suleiman field with design capacity
of 20,000 barrels per day and there were pre-sanctions plans to improve
recovery rates.
China is also a major destination for Iran's petrochemicals
industry, which utilises oil and gas resources to make chemicals such as
ethylene and raw materials for the Chinese plastics industry. Iran has the
Middle East's second largest petrochemicals industry after Saudi Arabia. Around
40 per cent of Iran's petrochemicals exports are sold in Asia, mostly on the
Chinese market.
Chinese industry transforms the petrochemicals products into
finished goods for export to Europe, North America and elsewhere.
Petrochemicals are used to manufacture car parts, white goods, construction
materials, packaging and electronics
In the Ahwaz region, petrochemicals complexes produce a
large bulk of Iran's petrochemicals output using the country's oil and gas
resources. In Mahshahr, PETZONE is Iran's first specialised economic zone with
seven complexes representing a total of 40 per cent of the country's polymer
capacity, making it one of the world's biggest concentrations of petrochemicals
production.
Chinese investors are reportedly preparing to back at total
of 21 petrochemicals plants in Iran. By 2016, US$12 billion of the finance had
been referred to the Central Bank of Iran for receiving facilities. In March
2016, Chinese investors agreed to back the US$4 billion Masjid Soleyman's
petrochemical plant, which should come on stream in 2018 and become the world's
largest producer of chemical fertiliser.
Consumer products in the West are produced with resources
plundered from the Ahwaz region. Yet, these petrochemicals plants stand accused
of contributing to environmental problems, dangerous working practices and
ethnic discrimination against Ahwazi Arabs.
Iran requires a substantial amount of investment to support
growth in its oil and gas sector, with the oil ministry estimating around
US$200 billion of foreign investment is required. Iran is planning to introduce
new oil contracts to achieve the production target of 4.7 million barrels per
day by March 2021. This will be crucial to maintaining the
However, proposed new
contracts have proven controversial within the establishment. The constitution
forbids direct foreign ownership of oil resources, but oil producers are
insisting on more favourable terms than the previous buy-back arrangements.
The terms of the new contracts are not yet fully known, but
will include full cost recovery, fee-per-barrel linked to the oil price and
extraction complexity and contracts will be extended to up to 25 years,
including exploration and production periods.
However, the Iranian government continues to cast aside
demands for oil revenue redistribution lodged by members of parliament for the
Ahwaz region. Majlis members have repeatedly requested 1.5 per cent of oil
revenue be held for poverty alleviation and social development in the Arab
populated areas, but this has been blocked by parliament.
Meanwhile, the powerful Guardian Council - the group of
clergy who determine whether legislation is constitutional and Islamic - has
stated that oil contracts do not need to be voted on by parliament. Ahwazi
Arabs and their representatives in the Iranian parliament have been denied a
voice as China and other nations continue to acquire resources for profit.
Source: UNPO
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