Memorandum submitted by the Foreign and
Commonwealth Office
LETTER TO THE PARLIAMENTARY UNDER-SECRETARY
OF STATE, FOREIGN AND COMMONWEALTH OFFICE FROM THE CHAIRMAN OF
THE COMMITTEE, 1 MAY 2003
Yesterday I met Ambassador Sarmadi at his request
to discuss a range of issues affecting UK-Iranian relations.
With the Ambassador's agreement, I enclose a
summary note of that meeting[1]I
would be grateful to receive your observations on the various
points raised by the Ambassador.
In particular, I would welcome a full statement
on the current status of the Mujahedin-e-Khalq (MKO), on the relationship
between coalition authorities and MKO forces and members on the
ground in Iraq, and whether this has changed recently. I would
also hope that you will be able to expand on the remarks attributed
to the Prime Minister by the Ambassador, and to comment on current
and planned high-level contacts with Iran.
As you know, the Committee was disappointed
to have to postpone the visit it had planned to make to Iran in
March. I am pleased to report that the Ambassador confirmed that
arrangements are being made for the visit to take place in October.
Chairman of the Committee
May 2002
LETTER TO THE CLERK OF THE COMMITTEE FROM
THE PARLIAMENTARY RELATIONS AND DEVOLUTION DEPARTMENT, FOREIGN
AND COMMONWEALTH OFFICE, 1 JULY 2003
IRAN
1. In the Chairman's letter of 1 May to
Mike O'Brien about the Chairman's meeting with Ambassador Sarmadi
on 30 April, he specifically asked about coalition policy towards
the Mujahedin-e-Khalq Organisation (MKO). It is just not true
for the Ambassador to claim that the MKO are a tool of the coalition.
As you will know, both we and the US regard the MKO as a terrorist
organisation; it is on the list of groups proscribed by the Home
Secretary under the Terrorism Act 2000. Furthermore, we firmly
believe that the MKO had been fully integrated into Saddam Hussein's
security apparatus. As such, during the conflict hostile MKO operatives
were targeted like other Iraqi forces. After the cessation of
hostilities US forces were not able to take on such a complex
organisation immediately. But I can confirm that on 8 May US forces
surrounded the main body of MKO forces and gave them an ultimatum.
They are now systematically detaining and disarming them. We appreciated
Iran's restraint in not intervening during the conflict. In turn,
the coalition has ensured that one of Iran's bitterest enemies
is no longer a threat.
2. It may be that one or two US army commanders
in theatre made ad hoc arrangements with factions of the
MKO. Added to this is MKO propaganda about a secret deal between
the US and MKO. And the coalition has not yet decided how to treat
surrendering MKO forces. Taken together, these may help explain
the Ambassador's comments, but his concerns are not warranted.
We have explained the position fully in Tehran as well as to the
Ambassador himself.
3. The Chairman also raised the Ambassador's
question about the Prime Minister's comment on high level visits.
As far as we are aware, he did not have a particular visit in
mind. Rather, he expressed the wish (which we share) that we should
thicken the bilateral relationship with further senior visits.
The FAC visit in October is a case in point.
4. The Ambassador also mentioned the formation
of a new administration. The coalition does not wish to stay in
Iraq longer than is absolutely necessary. But we cannot leave
until lasting stability has been achieved, and Iran has an important
role in this. In setting up an interim administration in Iraq,
we wish to ensure that all Iraqis have a voice in the process.
We assume the Ambassador's remark about groups choosing not to
be a part of the process refers to the Supreme Council for the
Islamic Revolution in Iraq (SCIRI). We have done all we can to
encourage SCIRI to join the process, and secured their participation
at the Central Iraq (Baghdad) Conference on 28 April. Furthermore,
with coalition assistance the leader of SCIRI, Ayatollah Al-Hakim,
was able to return to Iraq in person on 10 May.
5. The Ambassador was concerned that media
coverage of Shia religious fervour was being used to misrepresent
Iranian intentions. I cannot answer for spin the media may or
may not have put on events, though I think reasoned observers
viewed them as nothing more than legitimate religious events involving
Iraqi Shia who are Iraqi first and Shia second. But Iranian meddling
in Iraq is a separate issue, and the Ambassador is well aware
of our views.
6. Finally, the Ambassador's readout on
UK/Iranian relations interested me. But as seen from here, there
are some significant plus points. Afghanistan is certainly one.
The UK and Iran have similar views on the future of the country,
and our co-operation is benefiting Afghanistan and regional stability.
Bilaterally, there have been more ministerial visits in the last
couple of years than at any time since the revolution. Jack Straw
has visited four times. Mike O'Brien visited Iran in May and was
very well received, while Foreign Minister Kharrazi visited the
UK in early February and, as you know, saw the Prime Minister
and Jack Straw as well as yourself. A second round of negotiations
on a Trade Co-operation Agreement took place in Brussels last
month, and an FCO team visited Tehran to continue negotiations
on an Investment Promotion and Protection Agreement in February.
Difficult issues remain in the relationship. But we have made
progress since Mohamed Khatami became President.
Parliamentary Relations & Devolution Department
Foreign and Commonwealth Office
July 2003
A note prepared for the Foreign Affairs
Select Committee by Professor David R Cope, Director, Parliamentary
Office of Science and Technology (POST) (18/10/03)
THE ROLE OF NUCLEAR IN A MIX OF ELECTRICITY
GENERATION—THE CASE OF IRAN
WHAT THIS
NOTE DOES
AND DOES
NOT COVER
It is important at the outset to state what
is not considered in this note. With one small exception,
it does not address any aspects of the "nuclear fuel cycle"—neither
the supply of nuclear fuel for reactors (including the matter
of whether any fuel used requires "enrichment") nor
the management of spent nuclear fuel, (which will contain amounts
of plutonium that could be separated by reprocessing). It briefly
touches on the provenance of fuel supplies (domestic uranium capability)
but does not in any way consider spent fuel management facilities.
It further follows that there is no discussion
of matters such as the role of the Nantanz uranium enrichment
plant, the Isfahan uranium conversion plant and the Arak heavy
water plant, or compliance with International Atomic Energy Agency
(IAEA) safeguards under the Non-Proliferation Treaty.
Instead it is solely concerned with the broader
issue which is encapsulated in recent journalistic coverage as
"why (does) a country that float(s) over a sea of oil and
gas need nuclear energy for electrical power?"[2]
A RECURRENT DEBATE
It is worth noting that this debate is not new.
Iran began its nuclear electricity programme in the early 1970s,
during the time of the Shah. A requirement of up to 23 reactors
was openly discussed.[3]
In 1977, a US State Department official referred favourably to
a programme of eight reactors sought by the Iranian government,
to be supplied and built by US contractors, costing "many
billions of dollars."[4]
The debate at that time focused on several similar questions to
those being raised at present:
— depletion rates of oil and gas reserves;
— whether there was a need to divert
oil and gas into higher value end-uses than electricity generation,
related to export earning; and
— whether there was a requirement for
building flexibility into electricity systems.
Two elements are new to the current discussion.
The first is the environmental dimension—that diversification
away from fossil fuels will reduce amounts of greenhouse gases
emitted in the future, and also possibly other environmental impacts.
For greenhouse gases, this would, of course, be true with diversification
into any form of non-fossil generation (such as hydropower) not
just nuclear electricity, and maybe for other environmental impacts.
The second is consideration of the consequences of moving away
from state subsidy of domestic fuel (including electricity) consumption.
THE CURRENT
DEBATE
The current debate is encapsulated in three
sources on which this note draws. The first is a speech made by
the Iranian vice-president, HE Reza Aghazadeh, to the IAEA on
6 May 2003.[5]
A letter, dated 14 June 2003, from the Iranian ambassador in London,
widely circulated in the UK, carries an attachment that essentially
paraphrases this speech.
The second is an article dated 14 October 2003,
which appeared in the International Herald Tribune (and
was subsequently carried in several other newspapers) under the
heading "Iran needs nuclear power," written by two US
and one Iranian academic. This is appended as Annex 1.
The third is the testimony of John R Bolton,
Under Secretary for Arms Control and International Security at
the US Department of State to the US House of Representatives
International Relations Committee on 4 June 2003. This contained
the following widely reported observations:
Iran claims that it has no nuclear
weapons ambitions and that its nuclear programs are for civilian
energy needs. Given the country's oil and gas riches and its resistance
to strengthened safeguards, there are good reasons to think otherwise.
Finally, there is Iran's claim that
it is building massive and expensive nuclear fuel cycle facilities
to meet future electricity needs, while preserving oil and gas
for export. In fact, Iran's uranium reserves are minuscule, accounting
for less than 1% of its vast oil reserves and even larger gas
reserves. A glance at a chart of the energy content of Iran's
oil, gas, and uranium resources shows that there is absolutely
no possibility for Iran's indigenous uranium to have any appreciable
effect on Iran's ability to export oil and gas. Iran's gas reserves
are the second largest in the world, and the industry estimates
that Iran today flares enough gas to generate electricity equivalent
to the output of four Bushehr reactors . . .
As this briefing does not discuss indigenous
uranium resources later, it should be noted now that the argument
in the second paragraph above somewhat misrepresents the Iranian
position. Although Iran has stated that it is seeking to "domesticate"
as much of the nuclear fuel cycle as possible, the argument for
new nuclear build is by no means based exclusively on this source
of fuel supply. Depending on price, external sources of fuel supply
could well be relied upon. Of course, it is true that this may
give the external suppliers "leverage" over what happens
to the fuel once it is removed from the reactor and indeed to
other operational aspects.
THE CURRENT
AND POTENTIAL
FUTURE OF
NUCLEAR ELECTRICITY
GENERATION IN
IRAN[6]
In the event, in 1974, Iran turned to Germany,
not the USA for its first reactors. Construction began on two
1,196MWe capacity pressurised water reactors[7]at
Bushehr. After the overthrow of the Shah, work halted on both
"at a fairly advanced stage of the civil work."[8]
In 1991, inconclusive discussions began with China about smaller
reactors but in 1995, a contract was signed with the Russian Federation
to install into the existing building at Bushehr I a Russian VVER1000
type PWR of 915MWe capacity.[9]
There is no current activity to complete Bushehr II, although
Iranian sources talk about it being "envisaged,"[10]
The US federal Energy Information Administration refers to discussions
with Russia beginning in February of this year and there has been
an unconfirmed report that the Iranian Atomic Energy Council has
recently approved a 1,000MWe plant for the site. It is reported
that Bushehr II was more significantly damaged in Iraqi air attacks
on the site during the Iran-Iraq war (see below, regarding "nuclear
vulnerability").
The date when Bushehr I will start supplying
electricity is critically associated with the delivery of the
fuel for reactor operation from Russia. This is caught up in the
current political debate. The original contract scheduled operation
by the end of March 2004 at the latest, and until recently, December
2003 was quoted in official documents. However, a statement on
13 October 2003, by a Russian atomic energy ministry official
talked about a delay until 2005.[11]
Regarding the future, in 1997, the head of Iran's
Atomic Energy Agency referred to a goal of eventually meeting
20% of the country's electricity demand through nuclear power.
The Iranian energy ministry has also talked about adding 30GWe
of total electricity generation capacity within 10 years
(from 2001), virtually doubling existing capacity to 61MWe (UK
2002—70GWe). About 3GWe (all fossil—and not including
Bushehr I) will come onstream by mid-2004, while further ahead,
other existing projects will deliver about 6GWe of hydropower
and 4GWe of thermal power. Taking account of these additions,
and factoring in Bushehr I, results in an estimate of 7GWe additional
nuclear capacity required by 2010 were the aim to meet the 20%
target by then.
This is probably unrealistic—and figures
are not to hand for generation capacity expectations from 2010-20.
These are necessary to project the realisation of the 20% goal
only by the latter date. More useful is a specific nuclear target
of 7GWe by 2020 discussed by the Iranian vice-president in his
6 May 2003 presentation to the IAEA. Assuming operation of Bushehr
I, this translates into plans for an additional six 1,000MWe plant
by 2020. However, the speech also talks about additional aspirations
to develop "specially CANDU" reactor capacity. The latest
CANDU (CANada Deuterium[12]Uranium)
reactor is a 700MWe unit, although plans for 1,000MWe units are
under way.[13]
There have also been press reports on Russian discussions with
Iran on the supply of three to five additional reactors.
Future requirements for any nuclear plant would,
of course, also depend on what happens in terms of construction
of other types of generation facilities, including hydropower,
as discussed below.
CURRENT AND
FUTURE OVERALL
ELECTRICITY DEMAND
IN IRAN
There is no doubt that currently, Iran is heavily
dependent on fossil hydrocarbon fuels for electricity generation—over
90% of its capacity—with hydropower making up the remainder.
About 68% of capacity is gas-fired, the rest being oil fuelled.
As might be expected in a country which has
a rapidly growing population (currently 65 million and expected
to be 80+ million by 2010 and 100 million by 2025) and some measure
of economic growth, demand for electricity has been increasing
dramatically (quoted figures range from 7-10% annually). This
can be expected to continue for the medium term future (although
electricity industry sources worldwide tend to "talk up"
demand estimates). Given continued rates of economic growth, a
major driver will probably be demand for domestic and commercial
air conditioning.
Although simple availability of generating capacity
(and the fuel to power it) is not the only consideration in meeting
demand—transmission and distribution capabilities are also
important—there is little basis for questioning the realism
of the quoted forecasts of demand.
An interesting question relates to Iran's untapped
capacity for large(ish) scale hydropower generation. As noted
above, about 6GWe of capacity is currently under construction
(or planned).[14]
I have no further figures on this subject, and obviously the most
favourable sites (in relation to capacity and proximity to demand)
will invariably be exploited first. Large-scale hydropower schemes
have significant local environmental impacts and are increasingly
viewed with disfavour in many countries. On the other hand, they
are essentially carbon dioxide-free means of generating electricity,
which can be taken as an environmental "plus."[15]
GENERATION DIVERSITY
The note now turns to considering the various
arguments advanced to justify Iran resorting to nuclear power
to supply the stated proportions of new generation capacity.
Those familiar with recent discussion of UK
electricity generation capacity, where gas-fired stations provide
30% of it, might feel that the argument for diversification in
Iran, where the figure is more than double that proportion, is
cast iron. The situations are not, however, very comparable. Much
of the discussion in the UK has been driven by concerns about
future import dependence (including in the further future possibly
even from Iran) rather than on any "systemic" features
of relying on gas itself (other than the climate change argument—and
substitution of gas for coal and oil is desirable even here).
Iran undoubtedly has enough domestic fossils fuel that, if it
so chooses, it can supply current and future capacity for a considerable
time (see below).
"System resilience" concerns in electricity
generation tend to concentrate on the risk that design faults
common to plants that make up a high percentage of total generation
capacity might force unacceptable levels of emergency plant closure.
Paradoxically, this argument has most frequently been advanced
as applying to countries with a high reliance on nuclear generation
capacity, particularly where this is of standard design (eg France).
I am not aware of any discussion of design weakness related to
the type of fossil-fuelled plant used in Iran—around the
world many millions of operational hours have been clocked up
by such systems.
System resilience weakness deriving from domestic
circumstances can also occur with fossil-fired plant not because
of design failures but through interruption of fuel supply. One
cause can be labour unrest, as was the case with the miners' strike
in the UK. Hostile activity, domestic or international, to supply
systems (in Iran, for gas and oil, overwhelmingly pipelines) is
another consideration. It is obviously difficult to assess future
risks of such factors, in any country. Modern gas, oil and hydro
plants have low manual labour requirements. Nuclear plants on
the whole require similar levels of staff with similar skills
to those needed in fossil fuelled plant. A switch from fossil
to nuclear does not therefore lessen any risks arising from "labour
unrest." I cannot comment on the vulnerability of the fuel
supply infrastructure of Iranian fossil-fuelled plant to violent
hostile activity, due to inadequate information.
The conclusion must be that there few "system
resilience" factors supporting Iranian diversification into
nuclear power per se. Absent other considerations, Iran
could comfortably contemplate a situation where it operated a
system virtually 100% reliant on gas (which it will not anyway
need to, given existing and future hydropower capacity).
DEPLETION OF
FOSSIL FUEL
RESERVES AND
"FUTURE GENERATIONS'
RIGHTS"
This is the basis of the first argument advanced
by the Iranian vice-president in his May 2003 IAEA presentation,
where he said ". . . these resources (oil and gas, DRC) are
limited and belong to all subsequent generations and unrestrained
use of them is not prudent."
The word "prudent" is rather vague,
but accepting it in general, the argument essentially is a philosophical
one—and therefore less blatant than the economic and structural
bases of other arguments advanced. Nevertheless, at first take,
it certainly "chimes" with various debates such as that
on "sustainable development." However, exploring this
more deeply soon reveals that several resource economists have
advanced an alternative interpretation. They argue that there
is no contradiction in terms of future generations' "intergenerational
rights" if a non-renewable resource is used up at rates currently
dictated by the market, provided that the revenues generated are
invested wisely, so that their return contributes to economic
growth, the fruits of which will be enjoyed by the same future
generations (ie that they are richer).
This note is not the place to explore further
this rather "cerebral" consideration. The conclusion
must be that, while interesting, intergenerational rights considerations
offer no cast iron principles supporting diversification into
nuclear generation. Some would also argue that nuclear electricity
generation has long-term negatives, especially the need to manage
nuclear waste and decommissioned reactors.
POSTULATED FUTURE
VALUES OF
OIL AND
GAS AS
INDUSTRY FEEDSTOCKS
This is the second argument advanced in the
Iranian vice-president's IAEA speech. It has some resonances with
the "future generations" argument discussed above but
introduces a hard economic dimension. Those familiar with energy
policy debate in the UK will recall that similar arguments were
advanced in the past against using the UK's gas reserves for electricity
generation (although the "premium" use which figured
in that debate was gas for domestic heating purposes rather than
as a feedstock).
This is an extremely complex aspect to unpick.
Factors that need to be considered are the levels of future production
of hydrocarbon resources, both within Iran (see below) and globally;
trends in future demand for products made from hydrocarbon feedstocks
(eg plastics) (including trends in recycling) and potential alternative
future raw material sources (eg biomass). It should also be noted
that the "global warming" and, to some extent, the "local
circumstances" environmental arguments (see below), militate
against at least some part of the "premium hydrocarbon feedstock"
argument.
There is also the consideration of where
the conversion process to feedstock products would take place—whether
Iran would continue to export oil and (in future) gas for conversion
elsewhere or whether it would secure the added value by developing
domestic conversion capabilities.
If the argument is that Iran can position itself
to capture this added value, then this, at least to some extent,
gainsays arguments about the need to export as much energy end-use
hydrocarbons as possible. For example, the EIA reports that in
January of this year, Iran signed an agreement with Kuwait for
natural gas exports by 2005—specifically for electricity
generation.
Because of the uncertainties associated with
future forecasts of all these considerations, it is difficult
to speak to this argument with any degree of certainty. Possibly
the single most important factor is the reliability of current
estimates of future oil and gas production levels. If these were
greater than current assumptions, then (assuming no environmental
constraints) supplies could be used both for further processing
and for electricity generation.
The tentative conclusion is that there is some
substance to this argument but, without much greater economic
analysis, it is difficult to say how much, and, given the inherent
uncertainties of forecasting future circumstances, only limited
confidence could be placed in any emerging analytical results.
DOMESTIC USE
EATS INTO
HYDROCARBON PRODUCTION
THAT COULD
OTHERWISE BE
EXPORTED
This is the third argument advanced by the Iranian
vice-president in the IAEA speech. There is no doubt that Iranian
domestic consumption of oil and gas is increasing rapidly, although
I have not been able to explore in detail a sectoral analysis
of current and projected end-uses. This is needed to speak meaningfully
about what options exist, now, and in the future, for the various
means of meeting end-uses, including energy conservation, and
the role of oil and gas among these means.
It is, of course, indisputable that Iran relies
dramatically on oil exports for foreign exchange earnings—
over 80%. Into this must be mapped whether the country could,
in the future, capture premium use possibilities, but this in
itself would not, of course, reduce the oil export dependency.
Any government seeking longer-term security cannot ignore the
question of how the Iranian economy could diversify away from
this single source dependency.
I suspect that, in Iran, the overwhelming domestic
use of oil, as in virtually all countries, is in the transport
sector (in energy terms, Iran currently consumes about 33% of
its oil output domestically). This is a very specific market,
with few current realistic substitutes, certainly not electricity.
Iran has imported refined oil products for at least the
past decade. The domestic vs. export argument therefore really
attaches only to gas—specifically future gas. Gas export
potential is currently constrained, not by production limitations
per se but by infrastructure capabilities—the pipelines
(or LNG plants) to enable export being absent—and by political
uncertainties that bedevil securing of contracts.
However, the key consideration in evaluating
this assertion is, once again, the question of what future levels
of oil and gas production might be—that is the accuracy
of current assessments of exploitable reserves, at various market
prices, along with the export diversification consideration, discussed
above.
CURRENT ELECTRICITY
GENERATION PROFILES
ARE DISTORTED
BY GOVERNMENT
SUBSIDIES
This is the fourth argument put forward by the
Iranian vice-president and, as noted, is not one that featured
in the previous 1970-80s discussion of the entire question of
"nuclear substitution." He talks about "considerable
indirect subsidies on local fuel consumption," without detailing
their nature and the fuels concerned. Thus, the extent to which
electricity markets have been distorted is unclear.
Accepting, however, that various government
interventions may have skewed electricity markets in the past
(as in virtually all countries!), the argument comes down to what
would be the preferred new-build generation option in an undistorted
electricity market. At present, almost universally across the
globe, this is gas-fired combined cycle[16]
(CCGT) electricity generation (as in the UK), even in countries
which have energy dilemmas as acute as those that the Iranians
assert afflict them. Intense arguments rage about the economics
of nuclear generation but it is probably a reasonable generalisation
that, at present, there are few places in the world where
it is currently the cheapest option for new-build. This is implicitly
recognised in Iranian discussions, where figures of $1,000 per
kW of capacity have been presented for Bushehr I, as against $800
per kW of capacity for CCGT. I have seen no arguments for the
cost of new-build nuclear in the Iranian situation, nor for the
levelised costs of construction and operation of Iranian
electricity generation plant. The Iranian arguments go on to state
that the quoted costs of CCGT do not include the "environmental
externalities" associated with fossil-fuel generation. These
tend to be dominated by the very imprecise valuations given to
global warming effects, especially with gas-firing, which is otherwise
very clean in terms of emissions. Of course, it can equally be
argued that cost estimates of new-build nuclear may not include
all the environmental externalities associated with that option,
especially end-of-life management of reactor facilities and nuclear
waste. Also, it is difficult to accept that environmental externalities,
however calculated, would make up the full difference in cost
per kW between the quoted figure for CCGT and that for Bushehr
I—$200 per kW—a full 25% addition to the "basic"
cost.
My conclusion is that, in an "unskewed"
market, CCGT generation currently represents the lowest cost option
for Iranian new-build. It can reasonably be accepted, however,
that in future, there may be some convergence between costs of
new-build CCGT and new-build nuclear.
ENVIRONMENTAL CONSIDERATIONS
The final argument advanced in the IAEA speech
is "environmental issues which are now of concern to the
entire international community and all countries are encouraged
to observe the environmental standards to ensure the survival
of the earth . . ." What these standards actually are, is
not further explored, but the mention of "the entire international
community" suggests an implicit reference to climate change.
It is worth noting straight away that under the "Kyoto agreement"
(about the actual ratification of which there are considerable
doubts), Iran faces no formal obligations to constrain or reduce
emissions of greenhouse gases. In this respect it is different
from the UK. It can be argued, however, that all countries
face considerable moral expectations to take steps to reduce greenhouse
gas emissions. Whether this translates into a material consideration
that strongly supports a nuclear build policy is a moot point.
There are also local environmental considerations—emissions
of acidic gases, particulates, etc, risks of local water pollution
from oil leaks and spills at oil-fired plant, and so on. I have
not seen specific details of environmental circumstances at existing
Iranian plants but am willing to accept that previous oil-fired
plant, in particular, may not have observed the highest environmental
standards, so that local air quality may have been compromised.
Future build, however, would almost certainly be exclusively CCGT,
which has the most favourable environmental impacts of all fossil-fuelled
plant, so the comparison is invalid. In fact, local environmental
quality could probably be improved by hastening phase-out of oil-fired
capacity and substituting with CCGT.
As hinted earlier, there is an equally compelling
argument that environmental quality improvements could as easily
be achieved by substitution with other, renewable, electricity
generation sources, such as hydropower. Given Iran's climate,
solar photo-voltaic generation may also spring to mind. However,
it is indisputable that, presently and for the foreseeable future,
this cannot be an economic proposition for large-scale electricity
generation.
My conclusion is that the "environmental
card" does not unequivocally play in favour of new-build
nuclear. An authoritative analysis of this question would require
a very detailed comparative environmental costing of the various
options. This inevitably involves the comparison of "apples
and pears"—for example, with hydropower the environmental
impact of flooding a valley (habitat loss, social impact, etc),
versus the waste management requirements of nuclear power. Site
and country-specific considerations might dominate, so there can
be no automatic translation to Iran of the few heroic general
attempts to calculate such comparisons.
IRAN'S
OIL AND
GAS "RESERVES"
Much of the discussion above has singled this
factor out as the key consideration. There is no doubt
that Iran is, and will remain, a prodigious player. Current figures
give it 9% of the world's proven oil reserves, enough for 40-50
years' production at current rates, and gas reserves second only
to Russia, sufficient for 200+ years of current production.
Hydrocarbon reserve estimation is, however,
a notoriously imprecise art. A general nostrum is that, the more
that reserves are sought, the more are found. Current and projected
future prices per barrel or cubic metre are more critical in determining
estimates than vague geological notions of "amounts in place."
Iran is sometimes presented as a "mature" province,
meaning that most geologically-determined reserves have already
been discovered, but this may be open to question.
There are certainly costs involved in providing
more precise estimates of realisable reserves under different
scenarios of future extraction costs and market prices but more
detailed figures on the Iranian situation would help to reduce
uncertainty in this key area. It would be useful to have full
information on plans to address this.
FLARING OF
GAS
This merits some discussion, as it was an element
of John Bolton's criticism, quoted above.
Natural gas supplies are drawn from two sources—"associated"
and "non-associated" gas. Associated gas arises as a
by-product of oil production. Put simply, it is the gas that overlies,
or is dissolved in, the oil reservoir that is the target of drilling.
Such gas is something of a problem—its explosivity and inflammability
making it a very real hazard—and in many situations its
management is a real cost. Without an economically-realisable
market for this gas, there are two options (not necessarily mutually
exclusive). Either it is flared (burnt) to negate the hazard,
or it is reinjected into the oil well, with the added advantage
that the pressure so created can sometimes release additional
amounts of oil—one example of so-called "enhanced oil
recovery." There is also the possibility that, in future,
the reinjected gas might be recovered for combustion use. A third,
very small, use of associated gas is to power electricity generators
to service the well sites. In Iran, about 10% of gas currently
emerging from drill holes is flared, while 30% is re-injected.
Iran is a pioneering province for gas re-injection. It is probably
fair to say that all oil producers try to find an economic use
for associated gas but if individual oilfields lie a long way
from markets, flaring may be the only option. Note, however, that
the environmental costs of flaring (principally the carbon dioxide
produced) are rarely factored into economic considerations.
Non-associated gas is produced "in its
own right" from fields with no oil present. Here, if there
is any flaring, it is only a temporary safety strategy. Current
estimates are that about 2/3rds of Iran's total gas reserves are
in non-associated fields.
The conclusion must be that John Bolton's observations,
while technically correct, have no current economic validity.
There is no market for the flared associated gas. Whether markets
might emerge in the future depends on the signals that the market
sends to encourage gas collection for "useful" burn
(and also the merits of re-injection).
NUCLEAR VULNERABILITY
There is one factor in consideration of Iran's
possible nuclear electricity generation strategy that has not,
to my knowledge, been a significant part of the debate. This is
the potential risk, from external adversaries, and maybe from
internal dissidents, of devastating attack on operational nuclear
facilities. Iran and its region is the locus of the only examples
to date of attacks on non-operational facilities—most "famously"
the Israeli air attack on the Iraqi Osirak reactor, under construction,
in 1981. Closer to home, the Bushehr site itself suffered six
attacks between 1984 and 1988 from Iraqi aircraft, during the
Iran/Iraq war.
Some reports say that Iran attempted "to
deter such an attack by moving reactor fuel to the site,"
but this is a high-risk strategy to say the least. Of course,
once the reactor is operational, the fuel is unavoidably present,
both within the reactor and almost certainly, also outside in
spent fuel stores. Its loss of containment would be overwhelmingly
the source of any subsequent nuclear environmental contamination
(dispersal of irradiated reactor components being comparatively
"small beer").
A great deal of attention has been given to
this issue over the past two years, in all western countries.
In the only western country with actual plans for new nuclear
build—Finland—the government recognised that it would
be impossible to secure a plant against a determined military
attack but did require design modifications to reduce the risks
from terrorism. I have seen no information on whether, and if
so how, Iranian plans have sought to address this consideration.
In the specific case of Bushehr I (and any completion of Bushehr
II), the particular circumstances of a Russian VVER1000 contained
within a structure originally designed for a German 1,200MWe reactor
must merit special attention.
Questions certainly should be asked about this
"new" consideration in the future of nuclear power.
"New" is in quotations because the risk of "nuclear
on nuclear" attacks, in the context of the Cold War, have
been discussed in the USA since the early 1980s.[17]
Professor David R Cope
Director,
Parliamentary Office of Science and Technology
18 October 2003
Annex 1
Op-ed article from the International Herald
Tribune, 14 October 2003
IRAN NEEDS NUCLEAR POWER
Los Angeles One often hears that Iran's
real purpose for pursuing nuclear technology is to develop nuclear
weapons and that with its huge oil and gas reserves it has no
real need for nuclear energy. Even those who should know better
claim that Iran, both now and in the foreseeable future, can easily
meet its energy needs without recourse to nuclear sources. We
would like to demonstrate that these claims lack substance.
First, it is important to bear in mind that
Iran's nuclear history pre-dates the current Islamic government.
It originated in the mid-1970s, when the Shah unveiled plans to
purchase several nuclear reactors from Germany, France and the
United States to generate electricity. With Washington's blessing,
the Shah's government awarded a contract to a subsidiary of the
German company Siemens to construct two 1,200-megawatt reactors
at Bushehr.
At the time, the United States encouraged Iran
to expand its non-oil energy base. A study by the Stanford Research
Institute concluded that Iran would need, by the year 1990, an
electrical capacity of about 20,000 megawatts. The first cadre
of Iran's nuclear engineers was trained at the Massachusetts Institute
of Technology. In recognition of Iran's energy needs, the final
draft of the US-Iran Nuclear Energy Agreement was signed in July
1978—several months before the Islamic revolution. The agreement
stipulated, among other things, American export of nuclear technology
and material and help in searching for uranium deposits.
Second, Iran's present electrical requirements
are far larger than had been predicted. With an annual growth
of 6% to 8% in demand for electricity and a population estimated
to reach 100 million by 2025, Iran cannot possibly rely exclusively
on oil and gas. The ageing oil industry, denied substantial foreign
investment largely because of American sanctions, has not been
able even to reach the pre-revolution production level of 5.5
million barrels per day. Of Iran's 60 major oil fields, 57 need
major repairs, upgrading and repressurising, which would require
$40 billion over 15 years. Iran's current production level of
3.5 million barrels per day is increasingly geared toward domestic
consumption, which has grown by more than 280% since 1979. If
this trend continues, Iran will become a net oil importer by 2010,
a catastrophe for a country that relies on oil for 80% of its
foreign currency and 45% of its annual budget.
Third, opponents of Iran's nuclear programme
often argue that Iran should opt for the more economically efficient
electricity from natural gas-fired power plants. Such arguments
are also not valid. A recent study by two MIT professors indicated
that the cost of producing electricity from gas (and oil) is comparable
with what it costs to generate it using nuclear reactors—not
to mention the adverse effects of carbon emissions or the need
to preserve Iran's gas reserves to position Iran in 20 or 30 years
as one of the main suppliers of gas to Europe and Asia.
Fourth, why should Iran deplete its non-renewable
oil and gas sources when it can, much like the energy-rich United
States and Russia, resort to renewable nuclear energy? Nuclear
reactors have their problems, and they will not resolve Iran's
chronic shortage of electricity. Yet they represent an important
first step in diversifying Iran's sources for energy.
Sadly, with their fear of an Iranian bomb, the
United States and some of its Western allies have failed to acknowledge
Iran's legitimate quest for nuclear energy, which is important
for a meaningful dialogue with Tehran to deter it from expanding
its nuclear technology to bomb making.
A small corrective step has been taken by France,
England and Germany, whose foreign ministers recently dispatched
a letter to Iran promising technical co-operation with Iran's
civil nuclear programme in exchange for full nuclear transparency.
This is wiser than the coercive approach by the United States,
which seeks to dispossess Iran of nuclear know-how altogether,
and is blind to Iran's energy and security worries.
The following attributions also formed part
of the article (DRC).
Mohammad Sahimi is a professor of chemical and
petroleum engineering at the University of Southern California
in Los Angeles. Pirouz Mojtahed-Zadeh is professor of political
geography and geopolitics at the Tarbiat Modares University of
Tehran and chairman of the Urosevic Research Foundation in London.
(This appears to be linked to the School of Oriental and African
Studies, University of London. I have no further information,
DRC). Kaveh L. Afrasiabi is professor of Middle East politics
at Chapman University, (Orange, California, DRC).
1 Not printed. Back
2
Taken from the "Pahlavi Era" website (retensed), on
web at: www.sedona.net/pahlavi Back
3
Stauffer, TR, Oil exporting countries need nuclear power, Modern
Power Systems, November 1982. Back
4
Institute for International and Economic Studies, Teheran and
Stanford Research Institute-symposium on "The US and Iran,
An Increasing Partnership" Address by Sydney Sober-US
State Department, 1977. Back
5
Iran's Nuclear Policy; Peaceful, Transparent, Independent;
on web at projects.sipri.se/expcon/iran-iaea0305.htm Back
6
Data in this and subsequent sections are primarily derived from
the Iran country entry in the IAEA yearbook and the April 2003
Iran Country Analysis Brief produced by the US federal
Energy Information Administration. Back
7
Ie each with about the same capacity as Sizewell B in England. Back
8
Ie the reactor buildings and associated infrastructure, not the
reactors themselves. The quotation is from the Iran country profile
of the IAEA yearbook. Back
9
Necessitating considerable modification to the building structure. Back
10
Iran country entry in IAEA yearbook. Back
11
Report on Moscow Times web site. Back
12
Paradoxically, the latest designs of CANDU reactors do not use
heavy water (ie where the hydrogen is present as deuterium) as
a moderator. Back
13
Atomic Energy of Canada Ltd (AECL) web site. Back
14
Sources to hand are rather vague on this distinction. Back
15
Although the decay of vegetation immediately after the reservoir
is flooded may release carbon dioxide and methane gases. Back
16
Generation that uses the heat both to turn a gas turbine and to
raise steam for a steam turbine, thereby achieving considerable
efficiencies over single system generation. Back
17
Ramberg B, Destruction of nuclear energy facilities in war,
the problems and the implications, Lexington Books, 1980. Back
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