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Last Updated: Monday, 14 July, 2003, 19:06 GMT 20:06 UK
Iran finds giant oil field

By Andrew Walker
BBC economics correspondent

Oil refinery
The Middle East's importance for oil production is growing
Iran has found new oilfields, with total reserves as high as 38 billion barrels.

Analysts say that only a small fraction of that may be commercially worthwhile, but it is nonetheless a very large find.

This discovery serves to reinforce an important feature of the long term outlook for oil supplies - that reserves available for future exploitation are dominated by the Middle East and Opec, the oil producers' cartel.

Much will depend on how quickly oil consumption increases.

But most analysts think that Opec is likely to account for an increasing share of world supplies.

Big slice of production

Saudi Arabia has the largest reserves, followed by Iraq.

The discovery underlines that Iran too is likely to play a major role in future energy markets.

The new oilfields have the advantage of being near the coast, which will help with transport costs.

But the crude oil they contain is heavy. It is more expensive to process and commands a lower price than the lighter oil which Iran produces at many other sites.

Much of the new oil will not be worth recovering. And it will take many years to come on stream.

Another recent discovery in Iran, made four years ago, has still not been developed and analysts say it is still years away.

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