Iran Oil Regains Strategic Market Role

Despite Western media claims of decline in Iranian oil exports, OPEC data and secondary sources, show Iran is bringing its oil sector back to its traditional market status by renovating infrastructure and upgrading its refining capacity.

Minister of Petroleum Mohsen Paknejad has dismissed rumors of falling Iranian oil exports as propaganda warfare, noting  Iran has no unmarketed oil. Vortex tracking data show that Iran sold 1.8 mb/d of crude oil in June, up from the previous month.

OPEC’s official report presents a clearer picture of Iran’s energy status in

2024.  According to the OPEC Annual Statistical Bulletin (ASB), Iran’s oil output grew 13% year- on year.

 On this basis, Iran’s enhanced oil production is the result of not only a temporary jump; rather, it is the result of the strategic rearrangement of the upstream oil sector against the backdrop of sanctions.

What gives depth and sense to sustainable growth in the energy industry is not just production, but also the ability to process and convert crude oil into valuable products. Iran comes second among fellow OPEC members in terms of refining capacity. It processes 2.237 mb/d of crude oil, making up 16% of OPEC’s and 2.2% of the world’s total refining capacity. However, what distinguishes Iran is the high ratio of oil refining to oil production, an index showing dependence on crude oil exports. Unlike many major exporters who sell the bulk of their oil, Iran has managed to preserve a high share of the oil value chain.

Such sophisticated refining structure provides further flexibility to sanctions while creating new capacities for Iran’s presence in regional and global oil and petrochemical markets. From this perspective, Iran’s refining capacity is seen a geopolitically important tool in the Middle East energy competition.

Furthermore, Iran’s geographical position, access to the Persian Gulf, the Gulf of Oman and the Caspian Sea along with an extended pipeline network, and petrochemical plants may turn Iran into a key operational center in Eurasia and Middle East energy chain. In case foreign investment is absorbed and relations are upgraded with key Asian partners, including China and India, they can play a decisive role in redefining Iran’s role in the global energy order.

Last but not the least, a proper understanding of the realities of Iranian petroleum industry, far from Western institutes’ biased data, requires a comprehensive look at production, export, refining capacity and geopolitical position indices. In a year fraught with challenges and sanctions, Iran’s ability to enhance production, maintain exports and expand domestic capacities indicates the sustainability and flexibility of Iran’s energy economics against external pressure. If steered properly, this capacity may push Iran strongly back to world energy market.

Petroleum Ministry Lauded for Wartime Management

President Masoud Pezeshkian’s visit to the Ministry of Petroleum just 18 days after the June 24 ceasefire, which ended a 12-day war of aggression by the Zionist regime on Iran, was not merely symbolic or administrative. That was a clear sign of the 14^th administration’s understanding of the vital role of the Ministry of Petroleum in managing national crises, preserving the stability of economic infrastructure and boosting national security under war conditions. It came out that rather being merely a source of income; oil is the backbone of economic resilience and a tool for defending national coherence.

Behind the Scenes

During the 12-day war, when enemy  air strikes targeted some vital infrastructure, continuous fuel supply became an issue beyond a technical challenge. That constituted a silent battle during which petroleum industry staff pushed ahead with energy production and distribution without even one moment of disruption. That prevented a crisis in the consumer market and fuel stations while injecting confidence into public opinion on the regular flow of energy supply.

What the Ministry of Petroleum did during that time was managing public calm beyond energy management. President Pezeshkian described it as a breakthrough in defeating the enemy plot for stirring trouble in the country.

Energy Security

The experience of the recent war showed once more that energy security is inseparable from national security. Had oil or refining facilities stopped functioning or fuel queues taken shape, the enemy would have used it to spread psychological warfare. None of these scenarios occurred because preemptive decisions, delegation of affairs to junior managers, flexibility of distribution systems, along with public support helped the petroleum industry value chain keep functioning.

This level of performance was in fact the point of connection between technology, management, commitment of human forces and social responsibility. In his message of appreciation, the president described it as the “bravery of petroleum industry staff”.

Regional Diplomacy

The 14^th administration, uttering the slogan of national solidarity and the priority of regional diplomacy, has described the recent war as an opportunity for redefining energy policies. Pezeshkian’s remarks that “war is in nobody’s interests and we have never been bullying and will never do so” carries a clear message to neighbors and international investors. Iran looks for stability, economic partnership and intraregional cooperation. The petroleum industry may clear the way for such constructive interaction.

Pezeshkian also called for taking benefit from opportunities of investment in energy production and consumption management. That indicates the 14^th administration’s  firm determination to receive foreign investment in the postwar circumstances and rely on energy as a tool for reconstructing economic diplomacy.

Fighting Trafficking

During the visit, the president’s emphasis on the necessity of improving productivity, controling fuel smuggling, and implementing a performance-based reward system indicates the beginning of some sort of endogenous structural reform in the Ministry of Petroleum; a reform that, rather than relying on restriction and austerity, considers participation of project developers in the profits from reducing resource waste as a motivational lever.

This policy, if implemented properly, could be a new starting point for modernizing energy governance in Iran; a model in which efficiency, agility, and individual motivation replace heavy bureaucracy and inefficient structures.

Defeating Crises

Minister of Petroleum Mohsen Paknejad said the president’s visit to the Ministry of Petroleum encouraged the staff and senior managers who, he said, represented the oil service workers who work round the clock.

“Definitely, the President’s presence at this Ministry encouraged the petroleum industry staff,” he said.

Noting that the petroleum industry value chain, from the oil and gas production platforms’ service workers to refineries, was the frontline of fuel supply in the country, he said: “One key decision was delegation of presidential affairs to ministers and provincial governors, which allowed rapid decision-making at sensitive times.”

Paknejad said the oil refining and distribution sector did a great job to prevent any shortages at fuel stations. He said that damage inflicted on gas facilities during the war was repaired in the shortest possible time. “Gas supply to the entire country was done so as to avoid any problem in the performance of National Iranian Gas Co. (NIGC).”

National Confidence

President Pezeshkian’s message may be summarized as follows: Oil is not just a natural asset, but a social asset for the Iranians. The oil industry staff defended national frontiers by guaranteeing sustainable oil supply. The government’s trust in them reflected public confidence in the 14^th administration.

Now the Ministry of Petroleum is entering a new phase, during which it should turn the experience of war to an asset for transformation, structural reforms, attracting investment and recreating the power of Iran’s energy geopolitics.

Technocracy-Based Energy Diplomacy

As soon as President Donald Trump took office in the United States, the global economy, in general, and the energy market, in particular, underwent significant changes. Over the past few months, the Trump-led US and China have been engaged in a tough trade war, reciprocating with heavy tariffs on imports from each other. The tariff war has added to concerns over the negative impact of US trade tariffs on demand for fuel, slashing around $2 from crude oil prices. Trump’s tariff policy, designed to plug the US budget deficit, has either directly or indirectly affected other countries. Iran has not been immune.

To give an in-depth analysis of Trump’s tariff war, “Iran Petroleum” has interviewed Mohammad Sadeq Jokar, head of the Institute for International Energy Studies (IIES).

Donald Trump’s comeback to the White House raised controversy from the very beginning as he adopted specific decisions. What consequences do such changes have for other nations?

First and foremost, it is necessary to get a general image of the process of events and US communications and interaction with other nations to learn about the approach Trump is pursuing. Then, in this behavioral system, we can discuss Iran’s energy market and its impacts on it. Reviewing Republicans’ energy agenda, particularly Donald Trump’s views, one may notice that the US president is focused on two pivotal issues in the domestic energy sector: first, enjoying the abundant benefits of energy at home, as the driver of economic growth and prosperity. He believes that such massive energy resources have not been exploited for two reasons: international obligations, such as restrictions associated with climate change, and the US domestic decisions’ alignment with such regulations. Trump regularly criticizes Joe Biden in this regard for having accepted obligations that affect the US energy sector, including consumption and prices. Regarding low carbon emissions, Trump believes that, owing to technological progress, it would be possible to prevent harmful environmental impacts, i.e., carbon emissions. Therefore, he sees international regime-building in the energy sector as a policy limiting US technical and economic potential in the energy sector and weakening US national strength in its rivalry with China to get the top spot in the world. That was all about US domestic issues in the energy sector. When such a stream takes shape in this country, its success or failure would have international impacts. In case Trump manages to improve the trend of oil and gas production and even other fossil fuels like coal in the US, the market will be affected, either in terms of exports or reduced imports. Therefore, it would not be limited to the US domestically; rather, it would have international impacts.

Can Trump succeed in his plans?

In late March, an expert meeting was held in the US about whether or not Trump’s plans would bring about fundamental changes in the energy market or whether or not the development of drilling in the US would repeat the 2010-2020 growth for the 2025-2030 period. Many are doubtful for their reasons, including production cost, unstable planning, and the impact of Trump’s tariffs on falling global demand, and falling oil prices. Regarding the decline in global demand and falling oil prices, the impact would be negative due to the specific and technical nature of US resources. For instance, unlike conventional oil, shale oil has a highly elastic pricing system. The reason is that in conventional oil reserves, investment is done in advance for a 15-year production from a field. Therefore, short-term price volatility would not impact production. But as 80-85% of production from an unconventional well ends in the first year, it is necessary to keep drilling new wells regularly. For this reason, unconventional resources show a stronger reaction to oil price fluctuations. Meanwhile, Trump’s imposition of tariffs on other nations would bring down global demand. Finally, oil price hikes and falling global demand would lead to market oversupply, thereby posing a serious challenge to investment in the US. Therefore, doubts remain about the US production trend for the 2020-2030 period to experience any repetition of the 2010-2020 decade.

Can we make planning based on such forecasts and analyses?

Such analyses are made based on the present circumstances, but the key point is that the Trump Administration believes that it can bring to fruition a revolutionary growth in the oil sector in the US. Therefore, in an analytic scenario, it could be assumed that the US could keep growing as the Trump Administration is planning for the other aspect of its behavior in international marketing and market-making based on its oil and gas production growth. In other words, it assumes that it can have production while in the following step, it can make export planning for acquiring a market share to realize an output hike. Currently, he plans to allocate part of this output hike to domestic consumption and take advantage of energy abundance in favor of development and growth. Following this plan, he is making diplomatic market-making in various forms, but with a single specification. It would be interpreted as follows: Setting aside patterns born out of the market economy in the international arena in the energy sector. Applying diplomatic pressure and using politico-economic tools, Trump is changing a paradigm that rarely existed in the international domain. He promises to ease sanctions or tariffs in return for energy purchases from the US. It is framing a market with its own regulations. Therefore, diplomatic market-making has its aspects and frameworks. First of all, it has plans for all nations, including Iran, Russia, and even OPEC member states. That means it should have a plan for the coming years so that in case US oil production grows, it should have already

chosen a destination for exporting surplus oil. Analysts may see Trump’s forecasts and plans as pure fantasy, but he believes that he is applying his plan for the entire world, and he has made direct and indirect plans, impacting a variety of sectors: from trading to pricing. Its proof may be seen in OPEC statistical data, OPEC+’s revised production plan, and acceptance of an oil supply hike, signs of Saudi-Russian cooperation in favor of the Trump Administration, and consequently, price falls. Under the former Administration of President Trump, the NOPEC draft was raised to counter OPEC as he deems it a cartel.

What solutions are available for producers and actors of the energy market?

Currently, a new framing has emerged in the international energy sector (fossil or renewable, even with a gradual and non-revolutionary view of energy transition), in which other producers, transit countries, and consumers are changing roles. Therefore, it is necessary for countries to first and foremost identify such framing and realize what is occurring to the global energy order, an order which was moving fast towards energy transition under Biden. In fact, in the Trump era, a new framing is emerging in which a rapid transition away from fossil fuels is no longer sought. According to a report recently published, given the discussions related to artificial intelligence (AI) and the need for electricity consumption in databases, the issue of using fossil fuels may be raised again more strongly than ever to provide sustainable and sufficient electricity they need. For example, in the US, due to the need for sustainable electricity production for databases, the issue of using coal-fired power plants has been raised until the sustainability of renewable electricity supply is resolved. The second step is for countries to know what role is envisaged for them in this new game, and the third is for actors to proactively redefine their roles in line with their capabilities and create scenarios for the space given to them.

Is a new scenario possible for Iran, too?

Countries whose international influence has decreased while being increasingly prone to impacts have no other choice but to either accept this situation or undertake a structural review of all economic, political, and energy governance dimensions domestically and seek to position their role in the international arena by building new capacities commensurate with emerging opportunities. Therefore, like many other countries, we should decide whether we want to passively accept the role that the Trump administration has assigned to us, or we first understand Trump’s approach and vision, and understand what he is looking for. In addition to strategic innovation and creativity, we can define a new role for ourselves by understanding our prominent position in the fossil fuel sector and also our standing on the issue of renewable resources, especially hydrogen and photovoltaics. With such a perspective, we can, in this new process, escape from the burden of the imposed role and turn our capabilities into reality by defining a new role. Otherwise, we will follow the path that is considered for us, because it is an undeniable fact that major actors who influence production, consumption, and processes in the fields of technology, energy economics, and the environment shape international regimes and impose them on others.

In light of Trump’s specific behavioral paradigm, is it possible to define ourselves a sustainable role based on our capacity?

Although we should not ignore the opportunities created by international grand plans, they are temporary opportunities that must be seized with urgency. If we are to achieve a sustainable presence based on our capabilities, we need to review our approaches, plans, and actions, especially in the area of ​​domestic energy governance and its outcomes, and create opportunities abroad. In fact, opportunities are created, and even with all the limitations, when we can create these opportunities, they will no longer be dependent on the plans of international actors and will be more sustainable. With Donald Trump in office, undoubtedly there will be unintended opportunities, such as the fact that he has, in order to protect his own interests, not only reduced but even reversed the growing pressure against fossil fuels in favor of renewable energies. These opportunities can temporarily affect our plans and vision, but if we want to have an opportunity in a sustainable way and not turn global energy trends into an inherent threat to ourselves, we must have the same macro-strategic review. On the one hand, reviewing strategies, action plans, governance processes, energy interactions within the country, both direct and indirect, including pricing and supply and demand, as well as behavioral economics and social capital, as well as reviewing behaviors and actions in the international arena. In this way, we can find sustainable opportunities for ourselves from ongoing events.

What are examples of opportunities in our energy diplomacy?

The Ministry of Petroleum has two major strategic obligations: first, ensuring energy security in domestic consumption from households to industry, and second, discussing the export market share that can turn export income into an economic driver. That means creating financial resources for domestic development and providing security by increasing the country’s energy share in international markets. With this mindset, it is necessary for us to take action in both domestic and international sectors. In the meantime, the issue that is very promising is first the decision-making will of the 14th administration, especially the president himself that creates a bright spot. Such a will, by spreading to other government bodies, can lead to fundamental and major decisions. Then come the processes related to overcoming the stumbling blocks in international issues, the outlook of which shows that the Americans have concluded that any escalation of the tense atmosphere that the US has created against Iran should be eased and that settlement should be sought instead so that finally the interaction with the Islamic Republic’s interests being respected. The third promising point is that, on a rare occasion in the energy sector, a technocratic approach based on planning and confidence in the academic and specialized sector has emerged in the petroleum industry, whose results were seen even in the second half of last calendar year. This issue is very valuable and can be seen as a window of hope. This trio may create significant potential for creating opportunities; even if we ignore the issue of lifting sanctions, we can still achieve opportunity creation by boldly making decisions at the presidential and heads of state levels, and by utilizing the expertise of a team of experts who thoroughly know the petroleum industry.

Iran Oil Sector: A Paradox of Potential and Opportunity

Fereydoun Barkeshli

Senior Energy Expert

Iran, strategically located in the Middle East and Central Asia, holds a huge amount of oil and gas. We are talking about some of the world’s largest proven crude oil and natural gas reserves. This means the country’s energy sector is incredibly important on the global scene, with immense potential for investment and for really capitalizing on Iran’s substantial wealth.

It is worth remembering that Iran was actually the first nation in the Middle East to tap into its oil reserves, back in the early 20^th century. Ever since then, the oil sector has been a key component of Iran’s economy and a major player in world energy markets.

I want to really delve into the investment opportunities and potential that Iran’s energy sector holds.

Energy Crossroads

Iran’s oil and gas sector has massive potential. To give you some numbers, it holds the fourth-largest proven crude oil reserves, around 155 to 160 million barrels, and over 33 tcm of natural gas. Despite sanctions and economic challenges, there is a renewed global interest in investing in and developing Iran’s energy resources. In this article, I will discuss the investment opportunities across the different parts of the country’s energy sector: upstream, midstream, and downstream.

The upstream sector, which is all about exploration and production, is the foundation of Iran’s oil and gas industry. Modernization here is a real priority. Iran could significantly increase its production capacity, well above 5 mb/d. But to make that happen, it needs a huge amount of investment and technology, both from within Iran and from international partners and investors.

Enhanced Oil Recovery (EOR) is another area where Iran’s oil industry needs improvement. It is the oldest in the Middle East, you know. Some wells have been producing for over half a century! They are aged, and they need a lot of investment, gas injection, thermal recovery, and technological help to boost production and slow down the aging process. The National Iranian Oil Company is also rightly prioritizing the exploration of new and untapped reserves. There are many areas within Iran’s borders that we have not even explored yet. Investing in advanced seismic surveying and drilling techniques could uncover some major new reserves.

It is tricky to publicize an exact figure on the investment needed in the upstream sector. But, a 2022 estimate by a private consulting group in Tehran suggested that Iran’s upstream sector needs something like $160-170 billion over the next decade. That would cover the losses from those aging fields and add new capacity.

Potential for Massive Investment

The midstream sector – that is, transportation and storage of crude oil, refined products, and natural gas – is also crucial. Iran’s extensive pipeline networks and its strategic location bordering fifteen countries by land and sea make it a great potential energy hub between Eurasia and the Middle East. Iran’s pipeline infrastructure could easily be expanded to neighboring countries for oil, gas, and refined products. Iran is a particularly important link for gas exports, both to Europe and to its eastern neighbors.

Upgrading existing storage facilities and building new ones, especially for LNG, would enhance the country’s market readiness and logistical capabilities. Iran started its first LNG plant in 1990. It then started four more, which initially put Iran’s potential LNG capacity at the top in the entire region. However, none of them were ever completed. LNG plants need sophisticated infrastructure and equipment, which only a few countries possess, and Iran could not access because of the sanctions on its energy sector.

And it is not just plant construction. Transport and re-gasification also require a lot of infrastructure and investment, which is mostly available only in a few countries. Russia and Qatar pioneered LNG projects, thanks to partnerships and joint ventures with companies like Total Energy and Chevron. Back then, Iran was ahead of Qatar and Russia in LNG projects.

When it comes to gas export strategies, any country that wants to be a major player in the gas markets needs to take serious action on LNG projects. The two main LNG projects in Iran that have made relatively dynamic progress are Iran LNG, with a planned capacity of 10 million tons per year, and Persian LNG, which is also close to completion but lacks sufficient funding and technology.

Some of Iran’s infrastructure is pretty old and aging, even though it is vast and expansive. It needs modernization and a major overhaul. This aging infrastructure is closely tied to environmental issues, and there is an ongoing debate in Iran about the environmental problems linked to poor governance in the oil sector and the country’s aging oil industry infrastructure.

The costs associated with oil in Iran include a wide range of economic, social, and environmental factors. While oil has historically been fundamental to the Iranian economy, the environmental damage it causes highlights the urgent need for comprehensive policies. These policies should promote sustainable energy practices and diversify the economy, so Iran can get the most out of its oil while protecting the environment and increasing export margins.

Beyond the Barrels

Developing renewable energy infrastructure requires significant investment, which can be difficult under the current sanctions. Iran has been a pioneer in renewable energy production in the Middle East. It inaugurated its first wind and solar energy production facilities back in the 1970s. However, when it comes to investment needs, Iran doesn’t require a huge amount of foreign exchange. Once it gains access to some key renewable energy technologies, Iranian startup companies could step in and rapidly expand the renewable infrastructure.

Iran is blessed with a wide range of climates and landscapes. It has three hundred sunny days a year, and two hundred windy days, making it extremely well-suited for renewables. The potential for investment in renewable energy sources in Iran is virtually limitless. Iran tried to combine conventional and renewable energy sources in Manjil city about three decades ago. Unfortunately, that coincided with the US sanctions on Iran’s

energy sector.

It's important to remember that investment in renewable energy is, in principle, a regional undertaking. Countries tend to perform better and more efficiently when they are linked across borders. Renewables produce electricity, which is different from hydrocarbons, which have many diverse uses.

A regional approach is also crucial when it comes to environmental issues. Many environmental hazards are common to the Middle East and the Central Asian republics. Cooperation among these countries is therefore vital. They could develop common environmental policy standards that serve the interests of the whole region. This, of course, requires a shared fund and investment strategy to tackle the environmental risks faced by the population.

Environmental Protection

As discussed earlier, environmental protection in Iran is complicated and multifaceted. According to a senior research fellow at the Atlantic Council, Iran needs to invest approximately 9 percent of its GDP in environmental protection over an extended period. This is a demanding task that requires cooperation between Iran’s neighbors.

Iran and its neighbors have a lot to gain from cooperation. While most of Iran’s neighbors are also oil producers, their economies are not all the same. Iran has a diverse and extensive economy, with some 25,000 medium and large-scale factories and production facilities. This is quite unique in the region. Because of this, the Iranian economy complements those of its neighbors; they support each other, rather than competing with each other.

All oil-producing countries are under huge pressure from environmentalists. As mentioned earlier, Iran and the countries of the Middle East and Central Asia are fully aware of the risks of environmental degradation and the complications of climate disruption. The Paris Climate Change Accord included discussions on imposing a carbon tax on oil producers. As we know, every barrel of oil produced has a carbon footprint, and the volume of emissions varies from field to field. Environmental organizations are pushing for an overall carbon emissions tax on oil producers.

Downstream Sector

Iran boasts the second-largest downstream sector in OPEC, with a registered refining capacity of over 2.00 mb/d, second only to Saudi Arabia. Before the Islamic Revolution, Iran had eight refineries. In the years that followed, twelve new refineries were built. Several refineries were damaged during the war but were later redesigned and modernized. Iran has advanced technologies for building refineries, and Iranian consulting companies are active in various countries around the world, building refineries and oil refining and distribution networks.

Iran’s oil refining sector is a vital part of its energy industry. It plays a crucial role in meeting domestic demand for oil products, and Iran also exports various refined products to other countries. It also provides feedstocks for refineries and export. Major refineries in Iran include Abadan, the oldest refinery in the Middle East, with a capacity of 0.5 mb/d and planned to expand further; Bandar Abbas refinery, with a capacity of 320,000 barrels per day; and Isfahan refinery, with a capacity of 375,000 barrels per day, which is the most diverse in terms of refined oil products.

In recent years, Iran’s refineries have been undergoing modernization and upgrades to meet the growing demand for petroleum products and to comply with international standards and environmental regulations. Iran’s refining sector and refining capacity expansion are extremely attractive to international investors, as Iran has the potential to become a key refined oil product hub for the entire region and beyond.

Iran offers numerous opportunities for growth and development in the following areas of downstream activities: investing in new refining capacity to meet the growing demand for petroleum products in a country with over 80 million people, a highly urbanized population, and a dynamic economy; upgrading and modernizing existing refineries, enhancing the quantity and quality of refined petroleum products; and improving and strengthening distribution networks across the vast and diverse regions of the country, including building AI-supported networks for stockpiling and transporting different products. By investing in Iran’s refining sector, international and domestic companies can benefit from the country’s strategic location, skilled workforce, and growing demand for petroleum products. With the right investment and partnerships, Iran’s refining sector can continue to grow and expand, contributing to the country’s economic growth and energy security.

Regional Cooperation

Regional cooperation in the energy sector is essential for ensuring energy security, promoting sustainable development, and driving economic growth. By working together, countries in the region can share resources, expertise, and knowledge to address common energy challenges and capitalize on opportunities.

By diversifying energy sources and routes, countries can reduce their dependence on a single supplier or route, enhance energy security, and lessen the risk of disruptions.

Regional cooperation can also facilitate the sharing of best practices and pave the way for the creation of a common energy market in the region.

This type of regional energy cooperation can drive economic growth by creating new opportunities for trade, investment, and job creation.

And of course, regional cooperation and collaboration will help promote environmental protection and reduce pollution. The opportunities for regional cooperation and common policies are immense. For Iran’s economic and energy cooperation with its neighbors, the sky is the limit.

As Iran’s economy and energy sector continue to evolve and grow, the country is positioned to play an increasingly important role in the global energy landscape. With its vast oil and gas reserves, strategic location, and growing capacity across the upstream, midstream, and downstream sectors, Iran has the potential to become a major energy hub in the region. By investing in the upstream sector, developing LNG projects, promoting renewable energies, and upgrading refineries and product distribution networks, Iran can unlock its full potential and accelerate economic growth, while contributing to a more sustainable and secure energy future for both present and future generations.

At the same time, the global energy landscape has changed dramatically since the pre-pandemic and pre-Ukraine war era. This new situation has led to a new Middle East, where key decisions are focused on unity, investment, and de-weaponizing oil. This sends a universal message to the world: “We need a more sustainable, secure, and inclusive energy future”.

Energy, Iran-Russia Main Bridge

Russia and Iran hold the world’s first and second-largest gas reserves. That takes up added significance when one takes into consideration Russia’s neighboring Iran. Iran and Russia together hold more than 37% of global gas reserves. Russia sits atop 35 tcm of gas, i.e., 19% of the world’s total, and Iran holds 33 tcm of gas, i.e., 17.1% of the world’s total.

Given the unreliable significance of energy in development and progress, energy security is instrumental, as many political events, friendships, and competitions across the globe revolve around energy. Energy is not merely an economic commodity; rather, it is a powerful tool in international relations. The countries rich in oil, gas, and petrochemical products can benefit from this potential in their foreign policy, national security, and economic development. Iran and Russia remain two key players in this domain. Although they face such political challenges as sanctions, they continue to impact the global energy market.

Energy Standing

Over the years, energy has grown into a strong bridge between Iran and Russia. In fact, given the similar economic structure of the two countries (reliance on energy revenues), similar political conditions (Western sanctions and pressures), and common interests in confronting Western hegemony, energy has become a focus of their convergence. Both countries are facing extensive economic sanctions, and in such circumstances, energy has become a tactical tool for economic continuity and the development of regional interactions.

Energy cooperation between Iran and Russia has grown stronger over the past five decades, and various memoranda of understanding have been signed between the two countries in the fields of oil, gas, and petrochemicals during different periods. The participation of Russian companies in Iranian oil industry projects over the past 44 years can be divided into three periods: During the first period (1978-1989), Russian companies participated in projects to develop Iranian oil and gas fields. During the second period (1989-2005), Iran-Russia cooperation in the oil and gas sector declined due to political disagreements between the two nations. During the third period (2005-2023), they saw their cooperation grow in the oil and gas sector anew. One case in point was the development of the West Paydar oil field. Over recent years, Russian companies have been further involved in developing oil and gas fields in Iran.

From March 2021 to March 2024, National Iranian Oil Co. (NIOC) signed MOUs with Russian companies like Gazprom for investment in developing oil and gas fields, investment in completing the incomplete Iran LNG project, defining new FLNG and mini-LNG projects, gas swap, petroleum products swap, building the high-pressure export pipeline, and transferring oil and gas technology. The MOUs are worth $40 billion.

Last calendar year, Iran and Russia struck several key MOUs in the energy sector, showing the depth of their cooperation in this sector. National Iranian Gas Co. (NIGC) and Gazprom in June 2024 signed a strategic MOU for the transmission of natural gas from Russia to Iran. Signed, while top officials from Iran and Russia were in attendance, it was a key step in favor of upgrading energy cooperation between the two countries. By that time, Iran’s petroleum minister said this agreement would bolster Iran as the regional gas hub and change the energy balance in the region.

In October 2024, Iranian and Russian energy ministers met in Moscow to discuss cooperation in the energy sector. During the meeting, they emphasized implementing joint energy projects, exchanging experience, and transferring technology in the field of design and manufacturing of gas turbines, and linking the two countries’ energy networks.

NIOC and Gazprom continued talks on how to implement the $40 billion MOU that covers development of the Kish and North Pars gas fields, compression at the South Pars gas field, development of six oil fields, swapping gas and petroleum products, completing LNG projects, and building gas export pipelines. That represented the largest foreign investment in the history of Iran’s petroleum industry.

Generally speaking, major contracts have been signed with Russian companies to develop oil fields in the country, totaling $4 billion in investment. The most important agreements are: the development of the Aban and West Paydar fields (76% completed), the development of the Cheshmeh Khosh, Dalpari, and East Paydar fields (26% completed).

Energy interactions continued between Iran and Russia into the current calendar year. Iran’s Petroleum Engineering and Development Co. (PEDEC) and Russia’s ZN Vostok (ZNV) held a high-level meeting on April 14 to explore options for developing oil fields, including “Aban and West Paydar” and “Cheshmeh Khosh, Dalpari and East Paydar”. On April 23-25, the Russian-Iranian Business Council (RIBC) held expert-level meetings in the run-up to its 18^th economic meeting. Explaining about the achievements of the 18^th RIBC meeting, Iran’s Minister of Petroleum Mohsen Paknejad said the agreements reached between Iran and Russia had sketched out the framework of long-term cooperation between the two nations, adding that the Ministry of Petroleum would severely follow up on implementing the agreements.

Asked about gas cooperation with Russia, Paknejad said cooperation would continue with Russian firms in the upstream sector. Gas trading was also a topic of discussion between Paknejad and Russian Deputy Prime Minister Alexander Novak. He said Iran was waiting for a response from the Russian side to finalize some MOUs. Several MOUs with Russian companies in the upstream sector would turn into agreements shortly.

In response to a question on Russian gas transmission to Iran, the minister said that an MOU had already been signed for Iran to receive 55 bcm/y of gas from Russia. Iran and Russia agreed on using the Azerbaijan territory for the planned gas transmission.

Russia would deliver gas to Iran in Astara, Paknejad said, adding: “Necessary arrangements are underway between Russia and Azerbaijan. The project would also have a second phase to be finalized in the future.”

Benefits of Cooperation

One key issue the 14^th administration is pursuing severely in the energy diplomacy domain, in line with the 7^th National Five-Year Economic Development Plan, is to increase Iran’s share of gas trading to turn the country into a gas hub in the region. Experts say Iran-Russia cooperation would facilitate Iran’s access to sophisticated technology and let Russia find a new oil and gas market. Iran-Russia gas cooperation would also bolster Iran’s status in future energy equations and subsequently the regional economy and security. Most neighbors of Iran currently suffer from a gas shortage. Russia has restrictions on gas exports. Therefore, Iran can take Russian gas and sell it to neighboring nations.

Furthermore, in light of US and European sanctions on Russia, Moscow’s ties with Tehran can prove beneficial for the Iranian and Russian petroleum industry. Iran would benefit from gas cooperation with Russia, be it gas swap or gas marketing. Such cooperation would finally help Iran become a gas and energy distribution hub in the region. Since Russia is far from India, the Iran route would be the best route for the transit of Russian energy and commodities to East Asia. That requires energy cooperation between Iran and Russia, particularly in the energy sector.

Iran’s gas cooperation with Russia can help us gain the necessary technology. For instance, Russia can help Iran in building infrastructure for offshore gas exports. Iran needs Russian technology to build a subsea pipeline to Oman for gas delivery. Swapping Russian gas can strengthen Iran’s political influence in the region, not to mention numerous political benefits for Iran. Iran has always sought to be a gas and energy hub in the region, therefore, gas cooperation with Russia can help it reach this objective.

Blunting Sanctions

Given Russia’s current situation in terms of sanctions from European countries and the United States, relations with Iran could be very beneficial for the Iranian and Russian oil industries. Reducing the effects of sanctions for both sides would include access to advanced technologies and investment for Iran, but it would also bring a new oil and gas market for Russia.

Russia is a country with significant experience and potential in the field of LNG and natural gas liquefaction; it has five major LNG facilities and 22 small-scale LNG facilities, so it can provide significant assistance to the Iranian oil industry in the field of LNG and natural gas liquefaction technology. This assistance includes technology transfer, investment, and technical cooperation. This cooperation can help Iran benefit from Russia’s experience and knowledge in this field.

On the other hand, Iran and Russia have had proper cooperation in the petrochemical sector, given the Russians’ interest. For example, an Iranian tech company exported about $9 million worth of various catalysts to Russia in the first half of the calendar year to March 2024 to supply its oil and gas industries.

Outlook for Cooperation

Given the geopolitical conditions, the huge capacities of both countries and Western sanctions, the prospects for cooperation between the two countries in the field of energy are expected to expand, deepen, and become more strategic. Because both Iran and Russia have massive reserves of natural gas. Given the European sanctions against Russian gas, the country is looking for new markets and reliable transit routes.

Iran can act as a transit route for swaps or exports of Russian gas to South Asian countries, the Persian Gulf, or even Africa. On the other hand, Iran needs advanced Russian technology in the field of directional drilling, gas injection, and enhanced recovery. Russia, under Western sanctions, is also interested in the Iranian energy market and access to profitable projects. Iran and Russia may increase their influence in the global market by coordinating in international forums such as OPEC+, the Gas Exporting Countries Forum (GECF), and the Shanghai Cooperation Organization (SCO).

Power Plants Largely Use Gas in Summer

CEO of National Iranian Gas Co. (NIGC) Saeed Tavakoli has said power plants extensively use gas during summer.

He said 95-98% of Iran’s population is connected to gas, adding: “In the summer, a significant segment of gas consumption occurs at power plants.”

Elaborating on NIGC’s measures for maintaining the stability of gas network following the recent 12-day imposed war on Iran, he said: “About 73% of the country’s energy mix is supplied by natural gas. During the 12-day imposed war, national gas infrastructure was struck on numerous occasions, including the strike on the refinery of Phase 14 of the South Pars gas field in Assaluyeh, Fajr Jam refinery, export pipelines and some urban installations.” 

Reiterating NIGC’s full readiness to deal with emergency conditions, he said: “From the very first seconds of strikes, urgent and targeted measures were undertaken across the network to prevent the least disruption in gas supply to consumers, particularly big cities.”

“Based on reports recorded at the Crisis Committee and 194 provincial centers, more than 6,000 heavy operations were carried out including rearrangement of valves, cooling and extinguishing fire and network stability. In some cases, operations were carried out in the shortest possible time in line with international standards,” said Tavakoli.

Noting that the main objective was to prevent gas emissions and causing threat in case of strikes on gas supply facilities, he said: “Fortunately, thanks to my colleagues across the country, particularly in Tehran which was struck occasionally, required action was taken fast and precisely.”

Tavakoli also said that an intelligent gas network system in Khorasan Razavi Province had become operational by installing 22 sensors at 114 key points in the province.

“The project is a significant step in upgrading operational management, enhancing network stability and digital transformation in the gas industry,” he said. “The project is not merely a technological measure; rather it has upgraded the quality of GIS maps, helped locate sensors, and improved the network stability and operations management.”

Petchem Sector Balanced Development Accelerating

CEO of National Petrochemical Co. (NPC) Hassan Abbaszadeh has reiterated that building infrastructure in the second phase of the Petrochemical Special Economic Zone (PSEZ) should be based on expert studies.

“The move towards a balanced development of the petrochemical industry may be accelerated by defining new projects based on existing infrastructure,” he said.

Addressing the Annual General Meeting of PSEZ, he said this zone was import for the value chain completion. “The companies that obtain basic agreement for work in the second phase of PSEZ are required to submit a comprehensive and precise plan for financing and building the required units in compliance with laws and instructions particularly with regards to civil defense.”

He said PSEZ was supporting petrochemical companies in Mahshahr, adding that PSEZ is required to oversee ongoing activities across the zone while the civil defense project there should be reviewed.

Jump in Kermanshah Petchem Output

The accumulated production from Kermanshah Petrochemical Company (KPC) reached 167,000 tonnes of urea plus 98,000 tonnes of ammonia during the first quarter of the current calendar year.

Compared with last calendar year, the urea and ammonia production shows 38% and 43% growth, respectively. KPC is the largest ammonia/urea producer in western Iran.

Furthermore, during the first quarter of the current calendar year, KPC earned more than IRR 18,150 billion from selling products, up 69% year-on-year. During the final month of the first quarter, KPC’s revenue reached IRR 7,390 billion, up from IRR 4,250 billion a year ago.

The key point of the jump in KPC’s production during the first quarter is that debottlenecking projects have been managed properly, as evidenced by data.

KPC’s annual output capacity stands at 1.05 million tonnes. By supplying 2,000 tonnes a day of granulated urea and 1,200 tonnes of ammonia, KPC is one of the largest producers of urea and ammonia in the petrochemical industry.

Isfahan Refinery Supplies Industrial Water

Gholam Reza Baqeri Dizaj, the CEO of Isfahan Oil Refining Co. (IORC), has announced the tentative operation of the first phase of a project for carrying water from sea to Isfahan Province.  

“By launching this project, about 700,000 cubic meters per month of industrial water needed for this refinery would be supplied,” he said.

He added that it was one of the key projects at the Isfahan oil refinery to materialize sustainable water supply to provincial industries, particularly under water shortage conditions.

“Given the geographically special position of Isfahan Province and frequent droughts, supplying industrial water has been on the cards for years. Now the ground is prepared for using sustainable water resources like the Gulf of Oman,” said  Baqeri Dizaj.

The planned conveyance of seawater is designed in two phases, he said. “The first phase includes carrying water through a branch for the Vasko pipeline, 339 km long, to Isfahan, which would extend 240 km and 219 km in the northern and southern routes. The northern route of this project would carry water to the refinery. It is now in the trial phase for the purpose of finally supplying 700,000 cubic meters per month of industrial water to the refinery.”

He said the Isfahan refinery was the first industrial facility in Isfahan Province to use seawater, adding: “Implementation of seawater transfer would overcome one of the biggest challenges industrial facilities in Isfahan are faced with, which is water shortage. There is capacity for water supply to Isfahan Province in this way.”

“The second phase of this project would involve laying out about 400 km of pipeline and installing required installations for direct water supply from the Gulf of Oman. The second phase has already been designed, pending financing,” said Dizaj.

South Pars Output Capacity Grows

CEO of Pars Oil and Gas Company (POGC) Touraj Dehqani has said the third infill well has become operational at the South Pars gas field.

“By operating this well, the recovery capacity from South Pars would increase 1.6 mcm/d,” he said.

Referring the progress in construction work in drilling infill wells in South Pars, he added: “The third well has become operational on Platform SPD19A in Phase 19 of South Pars.”

“Therefore, three wells have thus far come online in the infill project, adding 5.1 mcm/d to South Pars recovery,” he said.

Dehqani added that more infill wells would come online in coming months.

In addition, Shobeir Nabavi, director of South Pars infill projects, said: “Infill wells drilling would keep enhanced recovery from South Pars up and running.”

Touching on the latest progress in construction work associated with infill wells, he said: “The third well has become operational on Platform SPD19A, adding 1.6 mcm/d to the gas recovery.”

“The third well (SPD19A-04) was spudded to the depth of 4,073 meters with a 50-degree angle, installation of complementary string, extensive acidizing and connection to the processing installations present on the platform,” he said.

He said as operations go ahead in other wells being drilled in this project, more wells would be completed in coming months.

The infill project at South Pars aims drilling 35 wells in 17 gas platforms. That would lift the South Pars recovery by 36 mcm/d.

Iran Keeps Exporting Crude Oil

Iran’s Minister of Petroleum Mohsen Paknejad has said the country is continuing to export its crude oil.

He said he would neither confirm nor deny a report according to which recent data from Vortexa, a tanker-tracking firm, indicated that Iran’s oil exports reached a record high in June, with shipments exceeding 1.8 mb/d.

“It is noteworthy that some of such propaganda is part of psychological warfare. What is clear is that Iran’s oil exports are continuing like before,” he said.

Regarding speculation about the possible activation of the snapback mechanism, when asked if any plans had been formulated for oil exports, he said: “Definitely, we have some plans.”

Regarding gasoline supply, he said: “Currently there are no restrictions with regard to fuel supply, and people can travel comfortably.”

IRENEX H/C Transactions Up 26%

CEO of Iran Energy Exchange (IRENEX) Mohammad Nazifi said hydrocarbon transactions fetched IRR 850,000 billion during the first four months of the current calendar year.

He said the figure was up 26% year-on-year.

Referring to the key role of international rings in the transaction of oil, LPG, naphtha and kerosene, he said IRENEX’s share of the hydrocarbon market should increase.

Highlighting Iran’s great potential in the oil and gas sector, he said: “Despite its massive energy resources, Iran is still facing imbalance in terms of energy. The only sustainable solution would be to use the market mechanism through IRENEX.”

During last calendar year, IRENEX traded IRR 3,300,000 billion, IRR 2,800,000 billion of which came from hydrocarbon markets. The share of hydrocarbon transactions is above 80% in IRENEX transactions.  During last calendar year, LPG accounted for IRR 500,000 billion, naphtha for IRR 350,000 billion and kerosene for IRR 220,000 billion – constituting the largest international ring transactions.

“Based on these figures, IRENEX’s share of hydrocarbon market in the country is 5%, indicating that the bulk of these transactions occurs outside the transparent mechanism of exchange. There are currently 1,400 foreign investor codes active in IRENEX, mainly from neighboring nations and China. It is also possible to make settlements in hard currency in IRENEX transactions. Exports to more than 20 nations are carried out via the international ring,” Nazifi said.

He also said that arrangements were underway for issuing gasoil saving certificates, which would contribute to more transparent access to fuel and contain smuggling.

Over 17% growth in drilling technical services in four months

The National Iranian Drilling Company (NIDC) provided 2,326 specialized drilling technical operations to client companies in the first four months of the current Iranian year, marking a 17.5% increase compared to the same period last year, according to a company official.

Jahangir Shojaei, deputy managing director for technical affairs at NIDC, said the technical division encompasses drilling technical services, special services, IT and communications, and the refurbishment of rigs and equipment.

He noted that the majority of the company’s drilling fleet is active in operational zones managed by five subsidiaries of the National Iranian South Oil Company (NISOC). Of the total services delivered, 1,154 operations were conducted on oil and gas wells under drilling or production by NISOC.

Shojaei emphasized the role of these services in maintaining and enhancing oil production, adding that the company’s integrated technical services were also provided to the Iranian Central Oil Fields Company, Iranian Offshore Oil Company, Petroleum Engineering and Development Company, National Iranian Oil Company’s Exploration Directorate, and ongoing projects.

According to Shojaei, 485 operations were carried out by the Special Services Division, which offers services such as logging, mud logging, well testing, coring, casing exit, horizontal drilling, and directional drilling.

He highlighted key technical services such as matrix and selective acidizing, cementing, injectivity testing, coiled tubing operations, drill stem testing, air drilling, underbalanced drilling, well productivity testing, tubing installation, and packer installation. In total, 1,900 operations were conducted during the first four months of the year. Cementing alone accounted for 912 operations, representing a 47% increase from the same period last year.

Shojaei underscored the importance of rig and equipment refurbishment in optimizing the use of drilling assets and boosting productivity. He said that under a five-year plan, the company aims to refurbish 20 drilling rigs and various cementing, acidizing, and auxiliary service equipment through outsourcing and reliance on domestic capabilities.

He explained that the overhaul plan includes complete renovation of structures, fluid tanks, water tanks, mechanical equipment (draw works, mud pumps, hoisting systems), diesel engines, and electrical components such as traction motors, electric motors, generators, power control rooms (SCR), and instrumentation.

Overhaul of South Pars Refinery Successful

Mohammad Nemati, director of the 10^th refinery of the South Pars gas field, has announced that overhaul of the 10^th refinery of the South Pars gas field has been successful.

“Technically effective measures in the course of this overhaul would help improve the refinery throughput,” he said.

Nemati said thermal exchangers 102 and 202 had been cleaned entirely, while tubes had been washed. “Such measures would improve thermal conduction and prevent a decline in output. Leakage test is also underway.”

“Equipment necessary for starting Phase A have been fully prepared. In addition, calibration of transmitters and repair of 39 PVs at Unit 103 have significantly increased precision of measurement and control of operational parameters,” said Nemati. 

He said refrigerant propane compressors have been stabilized effectively and Phase A amine pumps have been installed online to guarantee the flow of amine and the efficiency of sweetening process.

“Depleting and replacing absorption beds, repairing PVs, expander, furnace and manual valves, full cleaning of valves, PSs and strainers, washing air coolers and conducting ESD and EDP tests were among other key measures during overhaul,” he said.

“This achievement is the result of round-the-clock efforts by the technical and engineering teams of the refinery, who have taken a key step toward sustainable gas industry development in full compliance with safety and quality standards,” said Nemati.

Drilling Fleet 78% Effective

Deputy CEO of the National Iranian Drilling Company (NIDC) for drilling operations Hamidreza Shafiei-Makvand said Iran’s drilling fleet efficacy has reached 78%.

“We have experienced a 9.1% reduction in standby time during the first quarter of the current calendar year,” he said.

Shafiei-Makvand said that these achievements were made possible through domestic capabilities, coordinated planning, and centralized management.

He further pointed to NIDC’s role in executing the country’s drilling projects, noting that as a subsidiary of National Iranian Oil Company (NIOC), NIDC plays a pivotal role with its fleet of 74 drilling rigs (71 onshore and three offshore).

Shafiei-Makvand said NIDC operates in oil-rich provinces such as Khuzestan, Fars, Ilam, Kermanshah, and Khorasan, with 64 rigs currently active. National Iranian South Oil Company (NISOC) operates 42 of these rigs, while the rest serve other contractors, including Iranian Offshore Oil Company (IOOC), Arvandan Oil & Gas Production Company (AOGPC), and EPC/EPD projects.

He added that standby time decreased from 14.6% last year to 9.1%, a historic record for the company, attributing the improvement to process optimization, continuous rig performance monitoring, and innovative solutions.

Shafiei-Makvand said the company is implementing a comprehensive program to refurbish inactive rigs, conduct overhauls, and upgrade rigs with new technologies using allocated funds. The goal is to reduce equipment downtime, boost productivity, and align technical standards with international benchmarks.

Despite international sanctions, a significant portion of drilling equipment and parts have been domestically manufactured, he said, emphasizing that collaboration with local contractors and producers has been key to the industry’s stability and growth.

Petroleum Products Network to Hit 15,000 km Length

Iran’s national oil and petroleum products pipeline network will soon exceed 15,000 kilometers, following the completion and commissioning of several major transmission projects across the country, according to the head of National Iranian Oil Engineering and Construction Company (NIOEC).

Mohammad Meshkinfam said the expansion is part of a broader strategy by the Petroleum Ministry to address imbalances in petroleum product distribution and ensure uninterrupted nationwide delivery.

One of the most strategic projects is the nearly completed pipeline of the Bandar Abbas–Sirjan–Rafsanjan, a 460-kilometer, 26-inch line capable of transporting up to 300,000 b/d—equivalent to 48 million liters—of refined fuel from the Bandar Abbas and Persian Gulf Star refineries to central and northern provinces.

Construction of this key corridor began in 2019 to boost transfer capacity from southern refineries. The project includes three pump stations in Bandar Abbas, Ghotbabad, and Mehreh Aran, as well as terminals in Sirjan and Rafsanjan. With over 120 trillion rials (approximately $240 million) invested, the pipeline will eliminate the need for 1,200 to 1,500 daily fuel tanker truck trips, lowering costs and improving the safety and efficiency of fuel transportation nationwide.

Meshkinfam noted that construction of over 1,000 kilometers of new pipelines is currently underway, with the Bandar Abbas - Rafsanjan line expected to reach full capacity by September. In December, during peak shaving, the system transferred nearly 100,000 barrels of refined fuel per day to central Iran.

Among other key projects is a new 37-kilometer spur from the Goreh–Jask pipeline to the Bandar Abbas refinery, replacing previous marine-based feedstock delivery with a land-based system.

In addition, the long-delayed Sabzab–Rey crude oil pipeline is nearing completion. Initiated in 2014, the 340-kilometer project is designed to supply feedstock to refineries in Kermanshah, Shazand, Tehran, Tabriz, and the prospective Anahita refinery. The multi-phase pipeline includes 30-inch and 26-inch segments with daily capacities of 450,000 and 295,000 barrels respectively, as well as an 18-inch section delivering 105,000 barrels per day to the Ray terminal.

Meshkinfam also said the 200km Urmia-Tabriz pipeline and the 37km Salmas-Khoy-Tabriz pipelines would come online soon.

Regarding the significance of the Pars pipeline project, he said: “The 400km Pars pipeline is expected to carry 12 ml/d of petroleum products from the Mehraran pumping station to Shiraz and central Iran. The pipeline is to replace tanker transport.”

Referring to the Shahid Mahdavi oil storage facility, he said it would be built next to the Bandar Abbas oil refinery. The project has been put out to tender.

Meshkinfam said 1,000 km of pipeline would become operational across the country in September, adding: “By completing and operating these pipelines, we would reach proper conclusions in petroleum products supply.”

OPEC Seminar in the Shadow of War

Amid accelerating geopolitical developments transpiring the world of energy, OPEC’s 9^th international seminar in Vienna (July 9-10) offered a good chance for various actors to expose their views about the future of energy security. The event was held only several weeks after a 12-day imposed war waged by the Zionist regime on Iran, ended. The war had been initiated with aggression of Iranian territory on June 13, posting a serious threat to Middle East stability and persistent oil supply. A truce was declared on June 25, but the fallout from the conflict continue to affect the energy market.

A video message by OPEC Rotating President, Iranian Minister of Petroleum Mohsen Paknejad, to the opening ceremony of the seminar was not just a political speech; rather, it reflected Iran’s efforts in redefining its role in global energy equations and a serious warning about the consequences of weaponizing the energy sector.

In his message, Paknejad said political stability and geopolitical security set the foundation for continued energy supply across the globe. That carried a clear message to Western and regional nations that resort to pressure or military confrontation.

The Iranian minister called for a principled stance against resort to war and using it as a tool for achieving political goals.

Violation of Intl. Law

Minister Paknejad reiterated that the Middle East has always been the beating heart of energy production in the world, saying: “Today, this region is faced with the immediate threats of the flagrant belligerence of the Zionist regime and the US.”

He noted that more than 1,000 Iranians, including energy exports, were martyred and more than 5,000 were injured in the air strikes.

“This savage military aggression against the territorial integrity of the Islamic Republic of Iran, which is a key supplier of energy in the world, blatantly violates international law and the UN Charter, specially coinciding with diplomatic talks about Iran’s peaceful nuclear program,” he said.

He went on to highlight the fundamental roots of the energy industry, saying: “This vital and growing industry needs peace and stability to fulfil its role in upgrading national and global welfare. Safe and sustainable energy supply relies on friendly ties between nations.”

He noted that war and instability, notwithstanding its origin, disrupts supply while adding to uncertainties among both producers and consumers.

Reiterating that the energy industry needs peace and stability, Paknejad said: “Let me draw your attention to this fundamental principle pertaining to the energy industry, particularly oil. This vital and growing industry needs peace and stability to be able to fulfil its role in upgrading welfare at the national, regional and global levels and also for advancing cooperation and development in a world that is changing rapidly.”

“History has taught us that safe and sustainable energy supply which OPEC has underscored for about 65 years and the Declaration of Cooperation since OPEC+ establishment in 2016, depends on peace and friendly ties and cooperation between nations,” he said.

Market Disruption

Paknejad touched on factors causing instability in the flow of energy to international markets, saying: “Any unstable situation, regardless of its cause, be it aggression or war that affect the flow of oil and gas supply to international markets, would add to uncertainties for energy suppliers and consumers and cause economic hardships to national economies.”

The general view of the challenges that the OPEC member states and their OPEC+ allies are faced with requires a firm position against resort to war for political objectives, said the Iranian minister. “That would be in nobody’s interests.”

“We firmly believe that our constant compliance and effective and practical support of the principles of unity, stability and respect for the sovereign rights of nations, as provided for in the OPEC Statute and the Declaration of Cooperation, constitute the fundamentals of moving along the safe route towards energy future. We need to push one another towards such principles not only through this seminar but also through all other interactions.”

Iran Compliance

Paknejad said: “As a founding member of OPEC in 1960, Iran has remained fully committed to the ideals and objectives of this Organization, remaining open to dialogue. Our country is the land of culture and civilization, and is a land of friendship, seeking interaction with the entire world.”

Referring to the future of energy, he said: “We need to invest further in all categories of energy, benefit from all technologies to upgrade productivity and reduce GHG emissions and understand the realities of energy in various countries. We should accept the fact that there are numerous routes for energy supply in the future.”

“Holding this seminar under such sensitive circumstances can carry a strong message in support of the excellent principles of sovereignty, stability and peace in favor of our shared interest,” he said.

Paknejad’s message to the OPEC seminar may be construed as the manifestation of Tehran’s postwar energy-oriented policy seeking to use the language of energy technocracy to speak about security, legal and geopolitical concerns. Insistence on the necessity of peace and stability in the region, warning against resorting to military confrontation and compliance with energy principles indicates that Iran is determined to use its historical standing within OPEC to call for wisdom and interaction in the global energy market.

Under circumstances where some nations are using oil as a tool for political pressure, Iran offers a different narrative: In lieu of war, energy should serve as a bridge for cooperation and peace. If backed by fellow producers, such viewpoint may sketch a new route in the future of global energy order that needs stability, dialogue and mutual respect more than ever.

The OPEC international seminar is among the most important multilateral meetings in the global energy industry, facilitating dialogue between oil ministers of OPEC, OPEC+, major oil companies, international bodies, investors and experts. Its latest edition was held to explore key issues of energy like energy security, energy transmission, technological innovation, sustainable development and future of energy market.

Infill Project, South Pars Second Pulse

The giant South Pars gas field supplies 70% of Iran’s gas needs. After two decades of incessant supply, it is today struggling with the challenge of pressure fall-off. Pars Oil & Gas Company (POGC) is in charge of development of the offshore reservoir. It is envisaging drilling 35 infill wells with a view to countering natural fall-off in production, enhancing the rate of recovery and stabilizing gas supply. That would finally lift the South Pars output by 36 mcm/d. While implementation of phase development projects at South Pars almost over, it is now presented as the strategic option for managing pressure fall-off and countering gas imbalance.

To get to know about the latest developments about South Pars, “Iran Petroleum” has interviewed Shobeir Nabavi, director of infill wells project.

How many wells are to become operational at this field by the end of the current calendar year in March 2026?

The first infill well came online last March, to be followed by the second one in early June and the third one in late July. We hope that six more wells would be completed by March 2026.

How much will these wells enhance the South Pars output capacity?

Each well can bring about 1-2 mcm/d output hike on average. If six more wells become operational by March 2026, about 11 mcm/d would be added to the South Pars output capacity. Add to this the 1.7 mcm/d additional output achieved last calendar year. Totally, about 13 mcm/d would be added to the South Pars output from infill wells. The output hike that is forecast to be achieved from 9 infill wells would be equivalent to half a standard phase, or 500 mcf/d (14.3 mcm/d). Once the total 35 wells have been drilled, about 36 mcm/d would be added to the gas output capacity; equivalent of 1 ½ standard phase.

What share have domestic manufacturers had in this project?

Although the technical knowhow used in offshore drilling is much more sophisticated, is associated with higher-risk and is costlier than in onshore drilling, it has been indegenized in Iran in recent years and we are now technically capable of handling this job. Our local contractors handle the job from A to Z. Regarding equipment and commodities; we have made our outmost in using maximum benefit from local manufacturing potential. However, in some cases, for various reasons, we have imported some commodities. Currently, 10-12 wells have been drilled on each jacket of infill wells. That shows the high volume of work under way at South Pars.

How much investment has been made in this project?

This project involves four packages of work, for which $1.2 billion worth of EPD contracts has been struck with four contractors. The first package involves drilling 8 wells in partnership with Petropars Oil Well Services Co. (POSCO), an offshoot of Petropars, for $272 million; the second package involves drilling and completing 9 wells in partnership with Petroiran Development Co. (PEDCO) for $284 million; the third package involves drilling 9 wells in partnership with North Drilling Co. (NDCO) for $308 million; and the fourth package involves drilling 9 wells in partnership with Pasargad Energy Development Co. (PEDC) for $304 million. The necessary capital for this project is provided by Kangan Saba Co., dipping into National Iranian Oil Co. (NIOC) resources. Required permits have been obtained for financing this project. We’re trying to bring the project fully online by March 2028 or 2029.

Do you think the number of drilling rigs increase by the end of this project?

To drill 35 wells, 4 rigs are operating. However, we intend to receive necessary permits to expand this project. If we name the current project “Infill 1”, we can name the following ones “Infill 2” and “Infill 3” by drilling 20 wells. That would become operational within the framework of two new packages and by adding two more drilling rigs under EPD contracts. It is also noteworthy that some measures are underway at NIOC and POGC to boost national offshore drilling fleet, which can help accelerate this project. However, under the present circumstances, the said project is in the phase of engineering studies and license acquisition.

Have wells envisaged in this project come online on schedule?

Each project may face delay due to circumstances, and the Infill-1 project is no exception to this rule. However, there has been no significant delay that I can mention now. We are trying our best to bring all wells into operation based on schedule. In fact, in light of operational plans and challenges associated with this kind of drilling, we have faced some brief delays. We can even say that the Infill-1 project has been among the best, in terms of respecting timeframe.

To what extent can completion of these wells contribute to gas supply security in Iran? What if POGC took no action to drill such wells?

Without infill wells, gas imbalance would increase because these wells are spudded on platforms that have faced output decline due to pressure fall-off. Therefore, by drilling infill wells, this output decline and subsequently imbalance would be compensated partly. The average output for each infill well is estimated at 1.3 mcm/d. Now, if the infill projects had not come online, imbalance would have increased. As after the drilling of these 35 wells, an extra 36 mcm/d of gas is expected, the same amount of gas imbalance would be avoided.

Can you tell us about POGC’s experience, particularly infill wells, during the recent 12-day war?

Iran’s petroleum industry is no stranger to war conditions. We have already experienced eight years of the Imposed War. During the 12-day imposed war, the project was not halted even for a single day due to our contractual obligations. Despite critical conditions, the rigs kept operating. More than 100 persons are working at each rig, whose activity ahs become tough due to security conditions. But due to the increased obligation to boost output ceiling by 13 mcm/d by the end of the calendar year and in light of gas imbalance, we didn’t stop working. Meanwhile, POGC’s gas security responsibility may be unique. Therefore, all our efforts were aimed at preventing any halt in operations. In fact, the infill wells were aimed at preserving gas production and compensating gas imbalance, as a mission assigned to POGC.

Market Governance to be Redefined

Transporting oil to refineries, refining operations and distribution of refined petroleum products across the country, building treatment facilities, pipelines and telecommunications networks used to be done in an un-centralized manner, but in 1991, these activities became integrated with the establishment of National Iranian Oil Refining and Distribution Co. (NIORDC). After 35 years, NIORDC stands at a point to make its supply chain smart, in which case, AI can be instrumental in boosting productivity, reducing risk, uncovering smuggling and preventing fuel waste. Farzad Barzegar, advisor to the CEO of NIORDC in digital transformation, told “Iran Petroleum” that the company is set to launch its monitoring center soon.

Below is the full text of the interview, Barzegar gave to “Iran Petroleum”:

What measures has Iran’s refining industry taken in benefiting from AI and digital technologies?

As far as AI is concerned, we need to watch out for misinterpretations. Over recent years, AI has been known only as LLM-based chatbots that represent a very different concept from the industry’s needs. The wrong impression is that AI is available and it can go ahead automatically. However, AI is the endpoint of a databased structure. The first phase is to establish a databased structure. The way data is gathered in such structure is also important. To that end, we will improve focus on the pace and precision of data gathering. Therefore, once we have the data process and structure and the mechanism of data gathering, the next step would be to let AI decide on distribution of products and make planning for that purpose. It has to be taken into account that the type of data AI needs for industrial purposes differs from chatbot data. The data here should be solid and without any error. One key issue is to identify locations that need sensor. Alternatively, we have to bring unused sensors back on line. Once the entire structure has been created in this chain, we learn the AI engines, which is the most simple and final phase. AI faces two key challenges: one is hardware that requires financing; second is data that represents the most important part of AI application. After removing these two challenges, the remaining issues would be resolved. Currently, our focus is on data gathering and we have designed the entire chain with a data-oriented look, as it is common in best-known software in the world. I would like to mention that in the refining and distribution chain, we started from the process. I mean, we designed the data-oriented structure of the entire chain and therefore we know today which data we need in this puzzle or what to do if the data is gathered by sensor or by humans.

If we want to break down the measures taken since the start of this chain, what is the first step taken with regard to the smartness of the refining and distribution industry?  

The chain covered by AI and modern technologies in refining and distribution comes from where crude oil is received from the upstream sector before being carried to the refinery by Iranian Oil Pipelines and Telecommunications Company (IOPTC). Then the crude oil is processed and products are delivered to storage facilities to be finally distributed. In the pipelines, it would be important to identify existing data like geographical position, pressure, flow and temperature in order to analyze the data, and make planning. That would also help us find possible leaks or damage from registered data. We have so far made great strides with regard to the metering of pipelines, but we will need 2 to 3 years to be able to declare that we monitor the entire chain in the pipeline sector. It is underway within the framework of a project for smartness of supply chain of petroleum products. A number of big companies have teamed up to lead the project in the form of GC. Planning has been made at IOPTC for metering in order to monitor the exact flow and the type of fluid at key points like refineries, power plants and export terminals.

As far as development of technological cooperation in the refining industry is concerned, MOUs have been signed for scientific, research and technological cooperation about smart refineries. What has been done in this regard in light of the extent of the operation of refineries?

We have provided refineries with data structure so that they can operate within the framework of our macro planning in the AI sector throughout this chain. We ask the refineries to give us data in specific processing categories. For that purpose, enterprise resource planning (ERP) should be established at all refineries. One of the best ERPs in the world is installed at the Isfahan refinery, and the Bandar Abbas refinery is also in the process of doing so. Numerous meetings have been held with other refineries. In fact, all refineries are following upon using ERP at the national or international levels. The information recorded in the industrial and processing automation of refineries is gathered and controlled in the distributed control system (DCS). Such data can feed AI to identify disruptions and faults. In the architecture designed for big data, part of DCS data of refineries would be transferred to this final set. Therefore, we receive the sensors’ data from DCS of refineries and processing data at the level of macroplanning.

The project has also begun to make storage facilities smart. What has NIORDC done in this sector?

The project to make storage facilities smart using sensors was carried out a few years ago and was rearranged due to the need for some changes, which we are currently in the final stages of the project to be able to put back into operation. In general, sensors measuring volume, temperature and pressure are installed for each storage tank, and the entire storage input can be measured through metering. The best sensors in the world are used in the storage facilities and their data will soon be collected automatically. However, until the storage facilities are made smart, the current plan is that we will get a 24-hour report for each storge facility.

The products distribution sector is the main sector that needs to be automized. What has been done for making this sector smart?

Another important issue is the distribution of products, where products must leave storage facilities and reach the end-user via tankers, rail fleets, pipelines, or in some cases ships. Here too, we need monitoring, and most of the monitoring at this stage concerns tankers that transport products on the roads, which is one of the hot spots for smuggling. Currently, less than 50 percent of tankers across the country are equipped with GPS. However, it may be necessary to change the type of GPS, and in addition, we have put several other sensors on the tankers’ agenda; we want to be able to monitor the weight inside the tanker in real time, and we plan to monitor the possibility of the tankers’ locks being opened. In general, all of these programs will lead to the automation of tankers so that we can monitor trace them, monitor product conditions, and the possibility of product replacement.

What stage are we in with regard to the automation of the refining chain?

Currently, we have specified the data structure of the entire chain and we are moving in parallel in all sectors. In the meantime, we have taken into consideration designing and operating business intelligence in our automation process. Since our team was set up a year ago, we have set up a BI-based structure whose data would be transferred to our integrated design once each sensor is added. The AI models are ready to be leaned. We just need data sensors with high duration. We are gathering 10-year historical data in order to spread AI models. As mentioned earlier, there is no software and coding challenge in AI, and we need to just manage data gathering. Given what we have done so far, all sensors are projected to be installed in one to two years, and necessary processing data would be gathered. Finally, our perspective is to enable us to review all data pertaining to the geography of storage facilities, filling stations, power plants, main consumers, pipelines and refineries and provide them to the distribution system. AI can help us arrange product transport from storage facilities and associated methodology. For this purpose, we have inked protocols with universities including Amir Kabir University of Technology and we have just to complete the data structure. We will probably inaugurate the monitoring center by September, and in the first phase, BI would be unveiled. In fact, our focus has been on business intelligence, because we believe that BI provides structure to data-driven businesses, and when the collected data reaches the appropriate maturity level, artificial intelligence engines will also be launched, which will probably be part of it this September, coincided with the unveiling of BI.

What is the necessity of using BI in refining and distribution?

BI can contribute to decision-makings by making business analysis, data and tools visualization and data mining. BI relies on examining data to make changes or eliminate and adapt to market changes. In another brief definition, it includes a set of strategies and technologies that most organizations and companies can use to analyze data and manage business information. BI manages the data structure of a business. Therefore, the main phase is the systematic collection of this data and its transfer to the data warehouse. This data warehouse is where all the data is stored, and maintains historical data. That is, after ten, twenty years, we can access all the data with a relational and integrated structure. In fact, BI is like the brain of a business that connects and maintains all the information and updates the information if needed. Thus, we can even connect artificial intelligence engines to the BI data warehouse in addition to raw data with high granularity. Once all the information and data is gathered completely, and the chain is made intelligent, it could be argued that in the entire oil industry of the country, no project with this structure has been carried out to date. In addition, if we manage to secure its financial resources in the next one or two years, we will be on par with standard and ideal examples worldwide.

Are all the activities associated with the process of automation of Iran’s oil refining and distribution industry national?

In general, in the petroleum industry, international versions are usually used in the field of hardware; of course, this is a normal procedure for all large companies and industries in the world, because it is not necessary for every company to have access to all the equipment and infrastructure. In data structure design and BI, however, all activities are carried out by relying on IT capabilities and processing knowledge within the organization.

 Could you tell us about the manner of financing the project? Has there been any necessity to attract foreign investment?

Regarding the financing of all smart projects in the refining and distribution chain, it is noteworthy that domestic investors will make the whole finance process. According to the legal clause of the 7^th National Economic Development Plan, all companies under the Ministry of Petroleum must be equipped with metering and monitoring by the end of the 7^th Plan. Therefore, financial needs have also been included in this plan. Perhaps the calculated number may differ from the actual needs of the project, but we are trying to provide financing with a clear job description and goal and achieve our ultimate goal. Of course, we have received financing approvals and our prediction is that it will be finalized in the next one or two months. On the other hand, we have signed a contract with three large companies as a consortium to participate in the tenders on our behalf, because we recognize this program as a megaproject. We can even claim that the pipeline metering that we are going to do can affect the global metering market internationally.

38 Investment Licenses Issued for 43mt Output Capacity at PSEEZ

Pars Special Economic Energy Zone (PSEEZ) comprises Pars I (South Pars), Pars II (Kangan) and Pars III (North Pars) zones. South Pars Gas Complex (SPGC) and Pars Oil and Gas Co. (POGC), which account for the bulk of energy supply in Iran, lie in this zone. Known as the country’s largest gas production hub, SPGC has been instrumental in the energy supply in Iran over the past 26 years. As this zone is based on the South Pars gas field, its main industries are gas refineries. Therefore, based on the feedstock they supply, petrochemical projects have been defined and account for a significant share of the petrochemical feedstock. Khosrow Afrouzeh, deputy head of planning and economic development at PSEEZ, has said that about 73% of the national gas supply comes from this gas area.

As these products supply the bulk of refineries’ feedstock, 25 petrochemical plants with a nominal capacity of 40 mt/y offer 51 products. According to the latest figures, total hard currency revenue from free and special zones, in the last calendar year, reached $18 billion, $12.3 billion of which came from PSEEZ. In addition to 25 production units, 38 licenses have been issued for investment in petrochemical projects for an annual output capacity of 43 million tonnes, which are expected to come online over five years.

Facilitating Investment

Projects underway and production units show that PSEEZ accounts for over 50% of national petrochemical production capacity, generating significant foreign currency income.

“Investors are aware of potentialities in this zone and are willing to invest there. We are responsible for facilitating conditions and processes of investment for their entry,” said Afrouzeh.

Noting that the main mission of PSEEZ is to attract investment for development of downstream industries, he said: “Enhancing the efficiency and effectiveness of management of financial resources and attracting investment for income generation, profitability and value-added generation at the regional level and supplying needs of key stakeholders and customers are among other missions assigned to PSEEZ, which would finally boost production and job creation in the region.”

Referring to measures undertaken to facilitate investment, he said: “In light of the big industrial potential created in the gas and petrochemical industry in this zone, the most significant objective of the Directorate is to facilitate the process of investment for regional development. One of the main divisions of the Directorate pertains to studying investment opportunities. In fact, in partnership with other sections of this Division, a preliminary study is done, and investment packages are offered. That includes information about the zone, varieties of feedstock, infrastructure, activities, and logistics available there for investors.”

Equal Support for Investors

The special position of this zone is, by itself, attractive to investors; potentialities such as access to feedstock at an attractive price, proximity to ports, and the Persian Gulf. Therefore, investment in downstream projects would boost job creation there.

Afrouzeh said the Directorate under his supervision is also studying other investment projects. Regarding the mechanism for investors’ endorsement of development projects, he said: “Investors present projects based on regional conditions and needs, while the PSEEZ Directorate of Planning and Economic Development conducts studies for obtaining a license. These studies result in signing agreements and allotment of land for projects. Through this process, the Directorate is working with investors to facilitate their activities.”

Rather than being limited to domestic applicants, it is extended to take care of foreign investors, too. In 2002, Iran adopted the Foreign Investment Promotion and Protection Act (FIPPA), based on which PSEEZ supports development projects and foreign investment.

On the allotment of land to foreign investors for development projects, Afrouzeh said: “The founder of the company established in Iran is required to be an Iranian national, but foreign investors can be among shareholders. Therefore, a foreign investor is required to be an Iranian company in order to present its projects in Iran and sign an agreement with the Iranian government and acquire land, but with 100% foreign shareholding. That would facilitate the process of investment in Iran.”

Investment Incentives

One of the main requirements for investing in the oil, gas, and petrochemical sectors is easy access to land and feedstock for implementing these projects. Afrouzeh said: “Investors and owners of development projects need financial resources and required infrastructure for their projects. Fortunately, the infrastructure is available in the zone, which includes access roads, ports, an airport, land, and utilities.”

Noting that a major incentive is to facilitate and shorten the process of acquisition of license for the projects, he said: “Before having access to this infrastructure and licenses, the process was time-consuming, but thanks to NIOC support and follow-up by the CEO of PSEEZ, more authority has been granted to this Directorate to facilitate and shorten the process.”

The fact is that investors need to deal with a single entity, and they are no longer accountable to other organizations. PSEEZ issues most licenses itself. Should investment documents be ready, allotment of land would take place within two months. The other issue is customs exemption. When ongoing projects reach production, they would be exempt from customs duties for 10-13 years.”

Small-Scale Investment Packages

PSEEZ has always welcomed foreign investors. Even today, despite all restrictions, local investment has flown into this zone. According to last year’s reports, about $1.5 billion worth of projects underway in this zone came from local investments.

The other key issue is the private sector’s engagement, which has grown in recent years due to decision-making for small-scale projects valued at $30-40 million. Afrouzeh said the bulk of projects pertain to the petrochemical industry, with output being polymer or chemical products. Building such capacity would be attractive to local investors, too. On the other hand, once international restrictions have been removed, enhanced security and stable economic factors would provide potential for introducing the capacities of this zone. Despite all current conditions, this zone remains attractive to investors.

Speaking about the most important plan by PSEEZ for the current calendar year, he said: “We’re trying to expand our communications with investors more than ever and shorten the process of awarding projects. On the external side, some communications have taken shape, and we have expressed our willingness to other countries, particularly the Persian Gulf littoral states, through the Ministry of Foreign Affairs. We have presented several projects to push local investors toward them. We intend to use their potential and capabilities.”

PSEEZ is at the heart of gas production in Iran, in addition to offering a valuable chain ranging from refineries to petrochemical plants and providing the ground for wealth and value generation. Smart incentives, available infrastructure, and facilitating the process of investment have transformed this zone into an ideal destination for investors who seek reliable efficiency and partnership in sustainable industrial development. It is high time to benefit from the numerous opportunities this dynamic hub is offering.

Tehran Refinery to Build 500MW Power Plant

The Tehran oil refinery is relying on domestic capacities to implement transformative projects to upgrade the quality of products, manage resources and step into renewable energies. Known as one of the oldest and now most important oil treatment facilities in Iran, the Tehran oil refinery has made multi-billion-euro investment in projects to upgrade the quality of gasoline, sweeten fuel oil, treat urban wastewater and build solar power plants as part of its plans for renovation and sustainable development.

The head of engineering at Tehran Oil Refining Co. (TORC), Babak Forouzesh Asl, said with the completion of the gasoline quality-upgrading project expected to come on stream next calendar year, Euro-5 gasoline production capacity at TORC would reach 8 ml/d. Furthermore, by setting about construction of a 500MW solar power plant and upgrading environmental infrastructure, the Tehran refinery is turning into a model where industry, clean energy and social responsibility meet.

€250mn Investment

Forouzesh Asl told “Iran Petroleum” that the gasoline quality- upgrading project started at the Tehran refinery in 2021 to enhance the quality of output to Euro-5 standards. This EPC project is underway by Iranian companies with €250 million investment.

Once completed, this project would bring the refinery’s gasoline production capacity from 6.5 ml/d to 8 ml/d. In addition to upgrading the quality of fuel, it would be a key step in line with legal obligations and boosting the environmental standing of the Tehran refinery.

He said to reduce sulfur pollutants; fuel oil sweetening is under study as a key project. It is designed in collaboration with the “Research Institute of Petroleum Industry” (RIPI), whose construction work is expected to start next calendar year to March 2026.

Due to the extent of the project, this project has potential to absorb both domestic and foreign investment. Acceptable economic indicators including a seven-year rate of return on investment have pushed international companies to join this project.

Electricity Infrastructure

Regarding management of resources, two basic projects for linking the refinery’s power supply network to national grid and recycling urban wastewater are on the agenda.

Connecting the Tehran refinery to national grid is a strategic project aimed at boosting the refinery’s power network stability and security, particularly at peak times. This project can help supply electricity needs under critical conditions while reducing dependence on gas for electricity generation to enhance energy efficiency and reduce pollution.

TORC is also planning to design, install and operate an urban wastewater treatment’s filtration system to supply up to 10,000 cubic meters a day of water to industrial sectors (cooling towers of the Tehran refinery) and also contribute to the water crisis management by earmarking about €14 million in the purchase sector and IRR 1,200 billion in the construction sector.

Officially, drinking water consumption in Tehran stands at 3.3 mcm/d, which would be cut when the previously mentioned project becomes operational.

Under this project, the refinery, in collaboration with the Water and Wastewater Authority, would use the urban wastewater treatment station for industrial purposes. In addition to reducing dependence on urban water, this measure would save water consumption in Theran by 1.5%. Both projects are expected to come online in the current calendar year.

500MW Solar Plant

TORC has signed a 500MW power plant construction agreement with the Ministry of Energy’s Renewable Energy and Energy Efficiency Organization (SATBA) to diversify energy resources and play an active role in clean energy development. TORC would be the first oil refining company in the country to build 4 solar farms with a total capacity of 500MW. This project is under construction at three locations around Tehran and one location in Yazd. The project is valued at $250 million. All necessary environmental permits, as well as technical licenses for linkage to the national grid have been obtained. Forouzesh Asl has said the project may be implemented within two years, noting its attractiveness to local and foreign investors due to selling electricity to the government in hard currency. He said it was a beginning of the Tehran refinery’s involvement in renewable energies, adding long-term plans were underway for further development in this sector.

Regular Renovation

The now decades-old Tehran oil refinery regularly implements major overhauls to improve the efficiency and safety of its units. These overhauls aim to increase reliability, reduce long-term maintenance costs, reduce emergency repairs of equipment and units, increase the useful life of components and equipment, reduce safety and environmental risks, and improve the efficiency of processes. Among the impacts of these repairs on the environment, which these days seem to be much more important than in the past, we can mention the improvement of the performance of treatment units, such as desulfurization, reducing the emission of sulfur and nitrogen compounds, which reduces the volume of suspended particles produced, and overall pollutant emissions are reduced as a result of this action.

Forouzesh Asl said: “Renovation in this refinery is a daily process. Depending technical and operational needs, the equipment is replaced or optimized.” He added that more than 90% of equipment needed at the Tehran refinery was supplied by domestic manufacturers, adding that some specific equipment like compressors or instruments were imported.

With a refining capacity of 250,000 b/d, the Tehran refinery is a main pillar of fuel supply in Iran. By implementing transformative projects in quality upgrading, development of renewables, managed consumption of water and power and equipment renovation, the refining facility is growing into a leading, sustainable and technological refinery. Increasing the Euro-5 gasoline output capacity to 8 ml/d, operating a solar power plant and reducing dependence on the urban water resources are just part of plans depicting the future of this refinery.

2.455bn Oil Barrels Awaiting Investment

The Mehr, Zagheh, Shour, and Genaveh oil fields are untapped offshore reservoirs that were recently introduced as opportunities for investment in Iran’s upstream oil and gas sector.

The four oil fields collectively hold 2.455 billion barrels of oil in place, with an estimated investment of $265 million required for their development. Mehr and Zagheh lie in Khuzestan Province, and the other two are in Bushehr. What has made the fields attractive to investors is their geographical position.

Khuzestan Province is the most important oil-rich region in Iran, accounting for over 80% of the national oil supply. Whereas many big oil fields lie in this province, the process of oil production and its transmission is of strategic importance, and sophisticated infrastructure, centralized management, and specific security protection are required.

Bushehr is also home to numerous oil and gas fields, accounting for a significant share of oil and gas production and exports. Due to hosting oil terminals and petrochemical plants, Bushehr plays a key role in Iran’s oil and gas industry.

Mehr Field

The Mehr field, where only one well has been drilled, is among the undeveloped onshore oil fields. The Mehr anticline lies in the North Dezful area, exactly between the Paydar and Azadegan fields. Discovered in 2012, Mehr is a jointly owned border reservoir. The idea behind the development of this field targets its Asmari reservoir.

The type of contract proposed for the Mehr development is EPCF/EPDF, with the investee company being Iranian Central Oil Fields Co. (ICOFC). Mehr is estimated to hold 46 million barrels of oil in place with an API gravity of 14.5. The gas-to-oil ratio is estimated at 310 cubic feet. The investment envisaged for this field is estimated at $50 million. Capital and non-capital expenditures would be reimbursed after the targeted recovery is achieved, as long as the contract is in effect. Recouping financing by the investor would be done throughout the contract.

Zagheh Field

The Zagheh field lies 25 km northwest of Deilam Port and 40 km east of Hendijan. It lies at the border between Khuzestan and Bushehr Provinces. Located 6km from the Persian Gulf, it is in the southeast of the Rag Sefid oil field. Discovered in 1979 by Asco, Zagheh underwent development in 2004. It is one of the three Iranian oil fields with heavy crude oil. One well has already been spudded in this field.

The type of contract proposed for the Zagheh development is EPCF/EPDF, with the investee company being National Iranian South Oil Co. (NISOC). Zagheh is estimated to hold 1.729 billion barrels of oil in place with an API gravity of 15. The investment envisaged for this field is estimated at $70 million. Capital and non-capital expenditures would be reimbursed after the targeted recovery is achieved, as long as the contract is in effect. Recouping financing by the investor would be done throughout the contract.

Shour Field

Discovered in 1979, the Shour field is set for development in its Asmari reservoir. One single well has thus far been drilled in this undeveloped onshore field.

The type of contract proposed for the Shour development is EPCF/EPDF, with the investee company being ICOFC. Shour is estimated to hold 30 million barrels of oil in place with an API gravity of 26.8. The gas-to-oil ratio is estimated at 536 cubic feet. The investment envisaged for this field is estimated at $70 million. Capital and non-capital expenditures would be reimbursed after the targeted recovery is achieved, as long as the contract is in effect. Recouping financing by the investor would be done throughout the contract.

Genaveh Field

Discovered in 2022, the Genaveh field is targeted for the development of its Sarvak reservoir. One single well has thus far been drilled in this undeveloped onshore field in Busher Province.

The type of contract proposed for the Mehr development is EPCF/EPDF, with the investee company being NISOC. Genaveh is estimated to hold 17 million barrels of oil in place with an API gravity of 23. The gas-to-oil ratio is estimated at 301 cubic feet. The investment envisaged for this field is estimated at $75 million. Capital and non-capital expenditures would be reimbursed after the targeted recovery is achieved, as long as the contract is in effect. Recouping financing by the investor would be done throughout the contract.

Exploration well drilling in this field began in 2020. Liquid hydrocarbon was struck at a depth of 4,572 meters.

Bright Outlook

Iran has, for the first time in the history of its petroleum industry, introduced opportunities for investment all at once. That promises a shift from the dominant traditional view. Introducing a 10-point incentive package and shortening the time required for signing oil contracts has added to the attractiveness of investment in the Iranian petroleum industry. Furthermore, low extraction costs, extensive consumer market in the country, access to regional and global markets, and petrochemical growth potential would make the prospect for investment in the petroleum industry brighter than ever.

Petrobras May Redirect Oil to Asia

Brazilian state-run oil firm Petrobras may redirect the oil it sells to the United States, sending more to Asia and Pacific markets due to higher tariffs the U.S. announced on Brazil, its chief executive told Reuters.

Although oil and gas exports make up a hefty share of Brazil's exports to the United States, Petrobras CEO Magda Chambriard said it is not an essential market for the firm.

"It is not much that we export (to the U.S.). In general, we are not very worried," she said in her first public comments about the 50% tariff U.S. President Donald Trump announced.

Exports to the U.S. represented about 4% of Petrobras' total oil shipments in its first quarter.

The U.S. is also unlikely to feel a major impact if Brazil ceases exports, as the South American country has supplied less than 3% of the oil the country has consumed so far in 2025, according to consultancy StoneX.

Chambriard's remarks come amid uncertainty in Brazil over whether the new round of tariffs, due to take effect on August 1, would impact oil. The commodity had been exempt from Trump's previous 10% tariffs.

In terms of oil products, Petrobras' exports to the U.S. accounted for 37% of a total of 209,000 barrels per day in the first quarter, but analysts told Reuters that the volume could also be redirected to other countries with ease.

US to Review Solar, Wind Energy Projects

The Trump administration said decisions related to solar and wind energy facilities on federal lands will be reviewed by the office of Interior Secretary Doug Burgum to end what it says has been preferential treatment for the renewable energy sources.

The elevated scrutiny is aligned with President Donald Trump’s pledge to undo the clean energy and climate change policies of his predecessor, former President Joe Biden.

In a statement, the Interior Department said the additional reviews would apply to rights-of-way, leases, construction and operations plans and other project permitting activities.

Most solar and wind facilities are built on private land.

"Today's actions further deliver on President Trump’s promise to tackle the Green New Scam and protect the American taxpayers’ dollars," Acting Assistant Secretary for Lands and Minerals Management Adam Suess said in a statement. “American Energy Dominance is driven by U.S.-based production of reliable baseload energy, not regulatory favoritism towards unreliable energy projects that are solely dependent on taxpayer subsidies and foreign-sourced equipment.”

German Chemical Lobby Sees No Sector Recovery

Germany’s chemical industry lobby VCI does not expect a sector upswing before 2026, even though the rapid downtrend the chemical-pharmaceutical industry has seen in recent years seems to be over, it said.

The chemical industry including pharmaceuticals recorded sales of 107 billion euros ($124 billion) in the first half of 2025, down 0.5% from a year earlier, affected by lower industry output as companies announce plant closures and job cuts, VCI said.

"The situation remains tense. In the first half-year, our industry produced around 15 percent less than in the pre-crisis year of 2018," Markus Steilemann, VCI president and CEO of Covestro, said in a press release.

The industry recorded a 1% drop in industrial production, while producer prices remained stable, the chemical association said.

The third-largest industry of Europe's powerhouse Germany can be seen as a bellwether for the broader region's economy as it produces material components used in various sectors ranging from automotive and construction to agriculture and textiles.

Germany’s BASF, Covestro and Brenntag recently lowered their annual forecasts, citing persistent global economic weakness, subdued demand and the impact of U.S. tariffs, with no signs of a near-term recovery.

"The business location Germany is overly expensive in an international comparison," Steilemann said, blaming this on excessive bureaucracy, non-competitive energy prices, and high taxes, labor costs and raw material prices.

To overcome these challenges, the German government has introduced a series of fiscal measures to stimulate the sluggish economy, including a 500 billion euro infrastructure fund launched in March and a 46 billion euro tax relief package approved in June to support businesses through 2029.

According to Anna Wolf, industry expert at the IFO Institute for Economic Research, the new infrastructure fund and electricity tax cuts for industry are the main driving factors for German business expectations.

India to Foil Possible Oil Sanctions on Russia

India is confident of meeting its oil needs from alternative sources if Russian supplies are hit by secondary sanctions, Oil Minister Hardeep Singh Puri said.

U.S. President Donald Trump had earlier warned that countries purchasing Russian exports could face sanctions if Moscow fails to reach a peace agreement with Ukraine within 50 days.

India should be able to deal with any problems with Russian imports by seeking supplies from other countries, Puri said. He noted there are many new suppliers coming onto the market such as Guyana and supply from existing producers such as Brazil and Canada.

Additionally, India is increasing exploration and production activities.

"I'm not worried at all. If something happens, we'll deal with it," Puri said at an industry event in New Delhi.

"India has diversified the sources of supply and we have gone, I think, from about 27 countries that we used to buy from to about 40 countries now," he said.

Responding to Rutte's comments, India's foreign ministry spokesperson said that securing energy needs was an "overriding priority" for the country, in which it was guided by what was on offer in markets and the "prevailing global circumstances".

"We would particularly caution against any double standards on the matter," spokesperson Randhir Jaiswal told a regular media briefing.

India's oil imports from Russia rose marginally in the first half of this year, with private refiners Reliance Industries Ltd and Nayara Energy making about half of the overall purchases from Moscow.

Russia continued to be the top supplier to India, accounting for about 35% of India's overall supplies, followed by Iraq, Saudi Arabia, and United Arab Emirates, the data showed.

In case Russian supplies are hit, Indian Oil Corp will "go back to the same template (of supplies) as was used pre-Ukraine crisis when Russian supplies to India were below 2%," company Chairman A.S. Sahney told reporters at the event.

World Oil Market May Be Tighter Than Expected

 The world oil market may be tighter than it appears despite a supply and demand balance pointing to a surplus, the International Energy Agency said, as refineries ramp up processing to meet summer travel demand.

The IEA, which advises industrialized countries, expects global supply to rise by 2.1 mb/d this year, up 300,000 b/d from the previous forecast. World demand will rise by just 700,000 b/d, it said, implying a sizeable surplus.

Despite making those changes, the IEA said rising refinery processing rates to meet summer travel and power-generation demand were tightening the market and the latest, accelerated supply hike from OPEC+ had not had much effect.

"The decision by OPEC+ to further accelerate the unwinding of production cuts failed to move markets in a meaningful way given tighter fundamentals," the agency said in a monthly report.

"Price indicators also point to a tighter physical oil market than suggested by the hefty surplus in our balances."

The comments strike a similar tone to the message earlier this week from ministers and executives of OPEC nations and bosses of Western oil majors. The output increases are not leading to higher inventories, which shows markets are thirsty for more oil, they said.

As examples of price indicators suggesting a tighter market, the IEA cited strong refining margins and the premium at which oil for immediate delivery is trading to later supply, a structure known as backwardation.

"Prompt time spreads are in steep backwardation and refinery margins remain healthy despite implied stock builds," it said.

Oil demand typically rises in the Northern Hemisphere summer as people fly and drive more on holidays.

Given rising seasonal demand, refinery crude processing rates will increase by 3.7 mb/d from May to August to meet Northern Hemisphere travel demand, the IEA said.

At the same time, a doubling in crude burning in refineries for power generation, typically to meet air conditioning needs, to around 900,000 b/d will further tighten the market, it said.

Nonetheless, the agency said this year's forecast for global demand growth of 700,000 b/d is the slowest since 2009, excluding 2020 when demand contracted due to the COVID pandemic.

The IEA said that, while it may be too early to say U.S. tariffs are slowing demand, the largest declines in recent data were in countries in the "crosshairs of the tariff turmoil," citing China, Japan, South Korea, the United States and Mexico.

IEA demand forecasts are at the lower end of the industry range, as the agency expects a faster energy transition than some other forecasters. According to OPEC, demand will rise by 1.3 mb/d this year - almost double the IEA figure.

China Naphtha Imports to Hit Records

China’s naphtha imports will hit record levels this year as new plants and caution over U.S. propane and ethane purchases will drive demand and support refiners’ margins for the petrochemical feedstock, analysts and traders said.

Cracker operators in the world's largest petrochemical producer, which pivoted in recent years to cheaper U.S. propane and ethane feedstock, are switching some demand back to naphtha after being ensnared in the U.S.-China trade war that disrupted their U.S. supplies, the sources said.

The need to diversify supplies and to meet demand from new plants will drive naphtha imports to an all-time high of 16 million to 17 million metric tons (144 million to 153 million barrels) this year, consultancies Rystad Energy and FGE said. JLC pegs 2025 imports at about 15 million tons.

China imported about 12 million tons in 2024, official data showed.

"With issues in imports of ethane and propane, there is a trust factor that has come into play when it comes to U.S. cargoes," said Pankaj Srivastava, senior vice president, commodity markets at Rystad Energy.

"Naphtha, on the other hand, is independent of these concerns because suppliers are varied."

A total of 4 million tons per year (tpy) of ethylene capacity is slated to come online in China by end-2025, aiding import demand, and this will increase to about 6 million tpy by first half of 2026, he added.

The International Energy Agency (IEA) said in its July report that China's naphtha demand is expected to rise by about 6% in 2025 and by 8.6% in 2026, significantly outpacing the combined growth of propane and ethane, which is projected at just 2.3% in 2025 and 1.3% in 2026.

Following the disruption in U.S. supply, China issued a second batch of 2025 naphtha import quotas in June totaling nearly 24 million tons, nearly doubling last year's allocations.

China imported nearly 6 million tons of naphtha between January and May, up 22.81% on-year and the highest level since 2015, government data showed, with Russia, the United Arab Emirates and South Korea the biggest suppliers.

This compares with a 6% on-year rise in propane imports to 12.3 million tons in the first five months, while ethane imports were flat at 2.3 million tons in the same period, government data showed.

China's liquefied petroleum gas (LPG) imports, which include propane, are likely to stay lower in the third quarter amid cautious buying of U.S. cargoes, Energy Aspects said in a July 4 note.

The robust naphtha demand is expected to underpin Asian refiners’ margins, analysts said. Naphtha margins have risen about 4% this month to $73.30 over Brent crude on hopes of healthy feedstock demand from China.

"Increased pull from China will provide support to (naphtha) cracks towards the middle of third quarter to fourth quarter," Rystad's Srivastava said.

Investment in $10bn Aramco Jafurah Deal

Saudi Aramco is close to a deal to raise around $10 billion from a group led by BlackRock that has been set up to invest in the infrastructure of Aramco's Jafurah gas project, two people with knowledge of the matter told Reuters.

The agreement would be the latest in a series of financial arrangements, akin to borrowing, that allow  the Persian Gulf oil producing countries to raise money to diversify their economies while promising investors a stable revenue stream.

The two people said the latest transaction was expected to be similarly structured to two Aramco infrastructure deals in 2021, including one in which BlackRock invested in Aramco's gas pipeline networks, allowing the Saudi company to generate funds.

Aramco kept control of the underlying infrastructure, while the investors earned tariffs from the oil firm for the use of the pipelines.

Both sources spoke on condition of anonymity because the talks are private. They did not say when the deal might be finalized. Aramco and BlackRock declined to comment.

The $100 billion Jafurah project, potentially the biggest shale gas project outside the United States, is central to Aramco's ambitions to become a major global player in natural gas and to boost its gas production capacity by 60% by 2030 from 2021 levels.

The Jafurah assets underpinning the deal include gas pipelines and a gas processing plant, one of the sources said.

Aramco has long been the biggest source of the kingdom’s revenues. Saudia Arabia has been seeking to diversify its economy as oil prices have come under pressure from global economic uncertainty that could further reduce demand.

They have also been depressed by increased output from the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, which is striving to boost market share.

In 2021, BlackRock and EIG were among investor groups that took stakes in companies that leased usage rights in Aramco’s gas and oil pipeline networks. The groups leased them back to Aramco for a 20-year period in two separate deals, helping the Saudi company to raise nearly $28 billion.

Described as lease and leaseback transactions by Aramco at the time, they were structured as a form of borrowing, Robin Mills, chief executive of consultancy Qamar Energy told Reuters.

"The pipeline deals were basically a securitization" and not a sale of the asset, whose ownership remained with Aramco, Mills said.

In those deals the groups took 49% stakes in subsidiaries Aramco Oil Pipelines and Aramco Gas Pipelines, in which Aramco retains 51% stakes. The subsidiaries receive a tariff from Aramco for flows of crude and natural gas, backed by minimum commitments on throughput.

The deals followed other transactions in the region, including Abu Dhabi's ADNOC sale of minority stakes in the companies owning the leasing rights to its oil and gas pipelines.

Kenyan Start-up Eye Carbon Credits from Thin Air

In the scrublands of central Kenya, technicians monitor four large metallic tanks where steam heated by the Earth's crust is used to pull carbon dioxide from the air in an effort to limit global warming.

Sitting astride the Great Rift Valley, a tectonic scar running around 7,000 kilometers (4,300 miles) down Eastern Africa, Kenya generates almost half its energy from geothermal plants, which spew out an abundance of excess heat and cheap energy.

That makes it well positioned to pioneer the use of Direct Air Carbon Capture, said Hannah Wanjau, an engineer at Octavia Carbon, which designed and built the machines.

DACC is an energy-intensive process that sucks air across a chemical filter which, when saturated with the greenhouse gas, is heated in a vacuum to release the CO2, that can be bottled or stored underground.

East Africa’s most developed economy also benefits from a surfeit of scientists and engineers thanks to the government's focus on and investment in universal education.

Octavia harnesses Kenya’s excess geothermal steam to operate its machinery in a cost-effective manner, while basalt rock formations are conducive to storing the carbon dioxide safely for long periods, said Wanjau.

"We have already seen the effects of climate change, so we want something that is going to work very fast, and remove huge amounts of CO2," she said.

Each of Octavia’s prototype machines captures about 10 tons of CO2 per year, akin to around 1,000 trees, which it can trade as carbon credits sought by businesses and governments to offset their harmful emissions.

The scale of the task is daunting, however.

Around seven to nine billion tons of CO2 will need to be removed from the atmosphere every year by the middle of this century if the world is to prevent global temperatures exceeding a 1.5 degrees Celsius (2.7 degrees Fahrenheit) rise above pre-industrial levels, according to a report co-authored by researchers at the University of Oxford.

Action to date has fallen far short of the deep emissions cuts that would achieve the goal set out by world leaders at the 2015 Paris climate accord. Last year was the first to breach 1.5 C of warming.

"Critics would be right to point out that what we currently do is a drop in the ocean," said Octavia Carbon's co-founder Martin Freimüller, who plans to commission a 1,000-ton per year plant by next year.

"But the point is that scaling from 1,000 tons (of carbon dioxide) to a billion tons, still starts with 1,000 tons."

Greenpeace and other environmental campaign groups say the carbon capture industry is used by oil and gas companies as a form of "greenwashing" to justify slowing the transition from fossil fuels to clean energy solutions.

However, the United Nations Intergovernmental Panel on Climate Change says that while reducing the use of fossil fuels remains a top priority, carbon capture will be necessary to reduce residual emissions from sectors that are hard to decarbonize, like cement and steel production.

EU to Fund Nuclear Energy in Next Budget

The European Commission wants to open up part of its proposed € 2 trillion EU budget for 2028-2034 to nuclear energy, a move likely to divide the bloc’s member states, which Germany immediately rejected.

In an annex to its mammoth budget proposal, the Commission listed nuclear power as an activity countries can fund through their national share of the budget - specifically, "new or additional fission energy capacity installed in GW".

Around € 865 billion of EU funding will be available under these national spending plans.

The move would be a sea change for the EU, whose current budget does not fund conventional nuclear power plants - reflecting a long-running conflict between pro-nuclear EU members like France and Sweden and traditionally anti-nuclear countries like Germany and Austria.

"Germany rejects any subsidization of nuclear power from the EU budget," its environment minister Carsten Schneider said, adding that Berlin respected the choice of other countries to build reactors.

"However, respect for national sovereignty in energy matters also means not claiming EU funds for this expensive path, a quarter of which comes from German taxpayers' money," Schneider said.

France's energy ministry did not immediately respond to a request for comment. Swedish energy minister Ebba Busch declined to comment.

The Commission's budget proposal marks the start of years of intense negotiations among EU nations, which must all approve the final budget.

EU countries have long been at loggerheads over whether to promote atomic power to reduce CO2 emissions, a dispute which has delayed policymaking on climate change and energy in the bloc.

That dynamic had appeared on the cusp of a shift earlier this year, when German Chancellor Friedrich Merz signalled Berlin would no longer object to treating nuclear power on a par with renewable energy in EU policies.

Countries including Denmark and Italy had also signaled a shift in their past opposition to nuclear power.

However, some EU diplomats said that this softening of positions had not extended into support for EU funding.

"There is no chance EU money goes to new nuclear," one EU country diplomat said.

The EU's current budget explicitly bans member states from building nuclear power plants using their share of hundreds of billions of euros in regional development funds - although the budget offers some limited funds for nuclear research and decommissioning of old reactors.

UK Funding Battery Recycling Project

An EV battery recycling project backed by Jaguar Land Rover has received British government funding to recover critical minerals from end-of-life batteries, startup Mint Innovation said.

The project to recover lithium, nickel and cobalt from used batteries is part of the 2.5-billion-pound ($3.35 billion) DRIVE35 program that the UK Department for Business and Trade launched to support the transition to electric cars.

Britain plans to phase out sales of new petrol and diesel cars by 2035. But globally demand for EVs has fallen behind expectations, with consumers citing high upfront costs as the main barrier.

The lithium-ion battery project will be in Britain's West Midlands and run for three years, Mint Innovation said in a statement.

The cleantech company's project is backed by Tata Motors' unit Jaguar Land Rover, LiBatt Recycling and the Warwick Manufacturing Group department of the University of Warwick.

It has secured £ 8.1 million in funding, including 4.05 million from the government's Advanced Propulsion Centre UK.

Britain's DRIVE35 will commit 2 billion pounds in funding to 2030 and an additional £ 500 million for research and development to 2035 to support job creation and EV innovation, the Department for Business and Trade said.

"Our advanced processes aim to not only deliver high-quality materials ... but also help to reduce our reliance on virgin materials," said Beth Johnston, Assistant Professor at the University of Warwick.

In April, Britain softened its demands on automakers to shift to EV production, seeking to alleviate pressure on an industry already reeling from U.S. import tariffs.

In June, Jaguar Land Rover trimmed its fiscal 2026 margin forecast due to slowing global auto demand, months after shelving plans to build EVs at a new $1 billion Tata factory in southern India.

China Eyes West Asia for Energy Supply 

Shuaib Bahman

Intl. Affairs Analyst

China is the largest energy consumer in the world. With growing demand for energy and the ensuing need to diversity its energy sources and secure supply chains, it is pursuing a comprehensive strategy to apply its Belt and Road Initiative (BRI) to guarantee sustainable energy supply from West Asia and Nort Africa. The BRI is designed to not only bolster China’s energy needs, but also it seeks to build economic partnerships and expand infrastructure to push China to strengthen ties with regional nations and extend its geopolitical influence.

Here, we analyze China’s BRI strategy to study various aspects of this approach, including energy security, development of infrastructure and transition to renewable energies to finally offer key points for the future.

Comprehensive Plan

Introduced in 2013 by President Xi Jinping, the BRI is described as one of the world’s largest infrastructure and economic projects, designed to connect Asia with Africa and Europe via a network of infrastructure, commerce and economic cooperation. In the energy sector, the BRI allows China to build strategic ties with West Asian and North African nations for the purpose of bolstering its energy security and reducing its dependence on limited energy sources. Analyzing this strategy is significant from the three perspectives of energy security and diversification, expansion of energy infrastructure and corridors, and transition to renewables.

1. Energy Security and Diversification

China is a large energy consumer, which makes it heavily depended on imports mainly from the Middle East. That has caused it numerous challenges. As one of the main hubs of global energy supply, the Middle East plays a key role in supplying China’s energy needs. However, in a bid to reduce the risk of overdependence on this region, China is seeking to diversify its energy supply sources through cooperation with Sudan in North Africa and also secure its energy transport routes. The BRI provides China with a framework for economic and political cooperation to sign long-term agreements with key partners like Saudi Arabia, Iran and Persian Gulf Arab states. Designed based on the win-win strategy, these agreements prioritize mutual economic interests.

2. Infrastructure and Energy Corridors

One of the most important aspects of the BRI is extensive investment in infrastructure to improve China’s connection to global markets and increasing energy supply security. Ever since its launch in 2013, the BRI has made significant investment in the energy sector. China reportedly invested $40 billion in the energy sector in 2024, the highest since 2017. Of that, $24.3 billion has been made in the oil and gas projects. China National Chemical Engineering Co. (CNCEC)’s $8 billion agreement to build an oil refinery in Iraq and Sinopec’s 44.5 billion contract with Sri Lanka are indicative of China’s focus on fossil energy supply. China has also shown great interest in energy transmission routes. China-Pakistan Economic Corridor (CPEC) is a case in point. By building direct routes to Persian Gulf oil pipelines via Pakistan, CPEC cuts time and costs for energy supply to China. Pakistan’s Gwadar Port, which is part of this corridor, serves as a more secure route for oil supply and commodity export to Central Asian, European and American markets. These projects can boost China’s energy security while also contributing to economic development in host nations. However, challenges like economic instability in some countries located on the route and environmental concerns associated with infrastructure projects continue to exist.

3. Transition to Renewables

In addition to oil and gas projects, China has shown special interest in renewable energies. In 2024, China invested $11.8 billion in green energy and hydropower, up 60% year-on-year. Solar and wind projects and converting waste to energy in Uzbekistan are part of such efforts. Furthermore, investment in power transmission and distribution, which amounted to $7 billion in 2023, is instrumental in transition to green energy.

As emergent markets for renewables, West Asia and North Africa have created unrivalled opportunities for China to be a leading nation in this sector. Relying on its expertise and financing, China has operated numerous projects for clean technology development in North African nations like Morocco, Algeria, Tunisia, Libya and Egypt. These projects include investment in solar and win energy capacity that have seen a significant growth since 2017.

Despite such progress, questions remain about the approaches and the logic behind this green transition in the Middle East and North Africa. China’s pragmatist approach focused upon development of industrial production capacity alongside renewable energy establishment may accelerate this transition. However, China’s extensive investment in fossil fuel power plants in the region has raised concerns about the environmental impacts of these projects.

Outlook

The BRI, boosted by massive investment in energy infrastructure and construction of strategic corridors, has played a key role in China’s energy supply security. By diversifying energy sources, this project seeks to improve global connections and support green energy projects with a view to striking a balance between short-term energy needs and long-term stability objectives. 

China’s strategy for sustainable energy supply from West Asia via the BRI combines efforts for energy security, development of infrastructure and investment in renewable energies. By building economic and political partnership with regional nations, this strategy helps supply China’s energy needs while bolstering this country’s geopolitical influence in the region.

However, this strategy owes its success to China’s ability in managing such challenges as political instability, environmental issues and global rivalries. In general, as a multidimensional tool, the BRI pushes China towards realizing its sustainable energy objectives and boosting its standing in the global economy. Therefore, China has no option but to invest in the energy sector outside the Middle East and alternative transport routes in a bid to reduce geopolitical risks.

Boosting Well Productivity by Innovative Strategies

Reza Abesh Ahmadlou

Materials and Energy Expert

Iran sits atop the world’s largest hydrocarbon reserves, with its massive South Pars gas field alone holding an estimated 280 tcf of recoverable natural gas. Yet despite this abundance, maximizing well productivity remains a critical challenge for Iran’s oil and gas industry. As global energy demands rise and competition intensifies, Iran needs to adopt cutting-edge technologies and innovative strategies to enhance recovery rates, reduce operational inefficiencies, and sustain long-term production. So, it is beneficial to explore the potential of advanced techniques such as ultrasonic stimulation, horizontal drilling, and wettability alteration to revolutionize well productivity in Iran’s prolific fields.

Condensate Blockage and Formation Damage

One of the most persistent issues plaguing Iran’s gas condensate reservoirs, such as South Pars, is condensate blockage. When reservoir pressure drops below the dew point during production, liquid hydrocarbons condense and accumulate near the wellbore, severely impeding gas flow. This phenomenon, compounded by formation damage from drilling fluids, scales, or asphaltene deposition, can decrease productivity by over 50%. Traditional solutions such as acid stimulation often fall short, risking further damage or environmental harm.

Recent research highlights ultrasonic technology as a game-changer for mitigating these challenges. Studies demonstrate that ultrasonic waves can reduce oil viscosity by up to 86% and improve recovery rates by over 90% when combined with conventional enhanced oil recovery (EOR) methods. The mechanisms - cavitation, thermal effects, and microjet formation- dislodge pore blockages and enhance fluid mobility without chemical additives. For Iran, where reservoirs share geological traits with Qatar’s North Dome Field (a proven testing ground for ultrasonic applications), this technology offers a sustainable and cost-effective solution.

Ultrasonic Stimulation

Ultrasonic stimulation has shown remarkable success in offshore wells, such as those in Southeast Asia, where it enhanced oil production by 30% and cleared wax deposits obstructing gas lift valves. Key advantages include:

- Eco-Friendly Operation: Unlike acid treatments, ultrasound generates no hazardous waste.

- Versatility: Effective for viscosity breaking, emulsion breaking, and scale removal.

- Synergy with EOR: Boosts efficiency when paired with waterflooding or CO₂ injection.

For Iran, deploying high-power ultrasonic tools in South Pars could address condensate banking and paraffin deposition, particularly in aging wells. Field trials in Russia and Qatar further validate its potential, with sustained production increases of 40-100% reported. However, tailored screening criteria are essential, as reservoir-specific factors like rock porosity and fluid composition influence outcomes.

Horizontal and Multilateral Wells

Horizontal drilling has transformed gas recovery in condensate-rich fields by minimizing pressure drawdown, a critical factor in delaying condensate dropout. Compared to vertical wells, horizontal wells exhibit:

- Lower Drawdown Pressures: Reducing near-wellbore condensate saturation by 6.5 times.

- Higher Productivity Indices: Up to 5.8 times greater post-dew point.

- Extended Reach: Accessing thin, high-permeability layers common in Iran’s carbonate reservoirs.

Multilateral wells, with their branched laterals, further amplify these benefits by distributing flow across multiple zones, reducing velocity-related turbulence (non-Darcy effects), and maximizing contact with pay zones. In Qatar’s North Dome, multilateral configurations minimized condensate blockage and improved recovery by 85% in high-permeability zones. For Iran’s complex reservoirs, such designs could unlock untapped compartments and enhance sweep efficiency.

Wettability Alteration

Wettability - the preference of rock surfaces to contact oil, water, or gas -profoundly impacts fluid flow. In gas condensate reservoirs, liquid-wet rocks trap hydrocarbons, exacerbating blockage. Chemical treatments like using fluoropolymer can permanently alter wettability to intermediate gas-wet conditions, yielding:

- Higher Relative Permeability: Gas mobility improves as trapped condensate is liberated.

- Increased Production: Some field data indicate a 2–3x boost in productivity indices after treatment.

- Economic Upside: A 9-ft treatment radius can add over $450 million in value per well over 15 years, according to surveys.

For Iran, applying wettability alteration in South Pars could mitigate condensate banking while reducing reliance on mechanical interventions. Pilot tests should focus on optimizing chemical volumes and injection methods for Iran’s high-temperature, high-salinity conditions.

 Integrating Technologies for Synergistic Gains

The true potential lies in combining these technologies. For example:

1. Ultrasound + Horizontal Wells: Ultrasonic tools can maintain clean perforations in long laterals, while horizontal wells amplify ultrasonic coverage.

2. Wettability Alteration + CO₂ Flooding: Gas-wet surfaces enhance CO₂ miscibility, improving sweep efficiency in fractured reservoirs.

3. Intelligent Completions: Real-time monitoring and adaptive flow control can optimize these hybrid approaches dynamically.

Case studies from ultrasonic-assisted surfactant flooding demonstrate recovery jumps of 10–20% over standalone methods—a compelling case for integrated strategies in Iran.

Overcoming Barriers: Research and Investment

While these technologies promise transformative gains, challenges remain:

- Field Validation: Most ultrasonic and wettability studies are lab-based; Iran must prioritize pilot tests in its unique reservoirs.

- Modeling Gaps: Accurate simulation of ultrasonic effects in heterogeneous formations requires further R&D.

- Cost-Benefit Analysis: High upfront costs for horizontal drilling and chemical treatments necessitate careful economic modeling.

International collaborations, like those between Qatar and Switzerland in ultrasonic tech, could accelerate Iran’s adoption while mitigating risks.

Roadmap for Energy Future

Iran’s vast reserves are matched only by the complexity of its reservoirs. By embracing ultrasonic stimulation, advanced well architectures, and wettability alteration, Iran may overcome productivity bottlenecks, reduce environmental footprints, and position itself as a leader in sustainable hydrocarbon recovery. The key lies in targeted pilot projects, cross-industry partnerships, and a commitment to innovation—an investment that will pay dividends for decades to come.

Pilot Projects and Collaboration

Before full-scale deployment, Iran should prioritize pilot projects to validate these technologies under local reservoir conditions. Partnerships with international firms—such as those that have successfully applied ultrasonic technology in Qatar’s North Field—can accelerate learning curves and reduce risks. Additionally, investment in research and advanced reservoir modeling will be crucial to optimize parameters such as ultrasonic frequency, chemical injection volumes, and well placement.

Economic and Environmental Benefits

Beyond increasing production, these innovations can reduce operational costs by minimizing the need for repeated stimulations and workovers. Environmentally, they offer cleaner alternatives to acidizing and fracturing, aligning with global sustainability trends.

Call to Action

Iran’s energy sector must embrace innovation to remain competitive in a rapidly evolving global market. By adopting these advanced recovery techniques, Iran can unlock billions of dollars in untapped reserves, enhance energy security, and ensure long-term economic resilience. The time to act is here—before reservoir pressures decline further and recovery becomes even more challenging. With strategic planning and bold investments, Iran can redefine its energy future.

As global energy transitions unfold, Iran has an opportunity to leverage its resources more efficiently, ensuring energy security and economic resilience. The tools are at hand; the time to act is now.