Oil Blinks at Private Sector

The signing of $2.5 billion contracts between National Iranian Oil Co. (NIOC) and domestic companies—carried out in the presence of President Masoud Pezeshkian—is not merely a ceremonial event or a short-lived news item. Rather, it should be interpreted as a policy and structural turning point in Iran’s petroleum industry; a moment that could redefine the path of interaction among the government, the private sector, and investors in this strategic industry.

The first clear message of these contracts is the transfer of 12% of national oil processing capacity to the domestic private sector. At first glance, this figure may appear to be merely a quantitative indicator, while at its core it reflects a profound shift in the government’s approach to the development of the oil industry. For years, one of the main criticisms of Iran’s oil sector has been the excessive concentration of the value chain in the government hands and the limited role of the genuine private sector. These contracts now indicate that policymakers have come to conclusion that without the active participation of the private sector, neither sustainable capacity expansion nor improvements in productivity are possible.

From an industrial perspective, assigning oil processing to domestic companies goes beyond mere contracting. Processing is a sensitive and capital-intensive link in the oil value chain, directly tied to products quality, loss reduction, energy efficiency optimization, and even exports. Entrusting this segment to the Iranian companies signifies confidence in domestic technical, managerial, and investment capabilities—the confidence that, if sustained, could lead to the emergence of strong private players in the oil industry.

However, the significance of these contracts is not confined to within Iran’s borders. The implicit message of this event to investors—both domestic and foreign—is quite clear: despite restrictions, sanctions, and environmental risks, Iran’s oil industry continues to offer strong economic appeal, and the fourteenth government intends to open new avenues for investment and private-sector participation. The president’s presence at the signing ceremony reinforces this message, underscoring that this approach is not merely a decision by a single ministry but one that is supported at the highest level of government.

From an energy policy perspective, these contracts could mark the beginning of a gradual transition in the oil industry from a “state-centered” model to a “participatory development” model—one in which the government acts as regulator and steward, while the private sector serves as the engine of execution, innovation, and investment. If this path is accompanied via institutional reforms, contractual transparency, and regulatory stability, it could help, to some extent, rebuild the trust that investors have lost.

Ultimately, the signing of this $2.5 billion contract should be seen not as an end, but as a beginning—a starting point for redefining the role of the private sector in Iran’s oil industry. The continuation of this path will depend above all on the government’s commitment to the genuine implementation of these contracts, its support for investors, and its avoidance of ad hoc interventions. Once these conditions are met, Iran’s petroleum industry could enter a new phase of growth—the one in which Iranian capital, technology, and management play a more prominent role in shaping the country’s energy future.

NIOC in $2.5bn Deals for Oil Sales

, in line with the 14^th Administration’s policies to attract investment in the oil and gas fields’ sector, on January 15 the National Iranian Oil Co. (NIOC) signed contracts valued at more than $2.5 billion, for the “Guaranteed Purchase of Drilling Services” and the “Purchase of Crude Oil Processing Services for Oil Fields,”. President Masoud Pezeshkian and Minister of Petroleum Mohsen Paknejad, and private and non-governmental companies attended the ceremony. With the signing of these contracts, 12% of the crude oil processing has transferred to the private sector. According to Minister Paknejad, the implementation of these contracts by the private and non-governmental sectors will build new processing capacity of 315,000 b/d for the country.

Since the beginning of the 14^th Administration taking office, the 7^th Development Plan has been the guiding framework for the economic and executive actions of government officials. This plan emphasizes the need to accelerate investment in the development of oil, gas, and petrochemical fields with the participation of the private sector. Accordingly, the Ministry of Petroleum has made special effort and has focused on the development of upstream fields in order to maintain and preserve the country’s oil production capacity.

This comes at a time when the 14^th Administration has been operating under the most severe international sanctions—sanctions that have intensified with Donald Trump’s entry into the White House and the reactivation of the snapback mechanism, further complicating and constraining global relations. Despite these conditions, Paknejad has announced that the average crude oil production last December recorded a rise of 225,000 b/d compared to the beginning of the administration’s term.

Additionally, in the area of raw gas production, a new record of 1.114 bcm/d was set in January following the adoption and implementation of a series of measures. In the field of production from shared fields, a new record also registered at South Pars, reaching 725 mcm/d. All of these achievements, realized on the eve of the 47^th anniversary of the victory of the Islamic Revolution, represent a golden chapter in the efforts of the oil industry’s workforce to maintain and increase oil production in the country.

Private Investment

In line with strengthening and supporting the private sector, the 14^th Administration has shown special commitment to such contracts. Accordingly, President Pezeshkian personally attended the signing ceremony of these contracts in order to send a clear message to private-sector stakeholders and, at the same time, underscore the importance of investment in the development of the oil industry.

One of the main challenges facing the private sector in entering the investment arena pertains to administrative procedures and tendering mechanisms, which in some cases consume a significant amount of a project’s time. Accordingly, the President has stressed that the government should adopt oversight mechanisms to monitor potential issues and obstacles facing investors and the private sector, and to take action to resolve them as rapidly as possible.

Moreover, one of the issues underscored by the Administration concerns the process of structuring and implementing investment contracts and the need to reduce project execution timelines. Accordingly, President Pezeshkian, at the signing ceremony of these two contracts, expressed hope that their swift implementation would create a win-win transaction for investors, the public, and the government.

Unlocking Investment

In line with the 14^th Administration’s policies to encourage participation of the private sector to invest in upstream fields, the Ministry of Petroleum has so far taken effective steps. Over the past year, several investment conferences have been held in the oil, gas, and petrochemical sectors, during which the investment opportunities and attractiveness of Iran’s petroleum industry were presented to economic actors and the private sector. The contracts for the land-based drilling rig supply project and the purchase of crude oil processing services for oil fields are defined within the same framework. Minister Paknejad has described these two contracts as one of the two wings for enhancing the country’s crude oil production capacity, calling the move an important achievement toward improving the nation’s economic indicators.

“Implementing the guaranteed purchase model for drilling rig services, we have targeted a long-standing structural bottleneck, and with the support of the oil industry, this model will generate a major wave of investment in the modernization of the country’s drilling fleet,” said Paknejad.

Within the framework of this plan, NIOC will, over a five-year timeline, undertake the guaranteed purchase of onshore drilling rig services along with their associated ancillary services from private and non-governmental investors, which in practice will strengthen the country’s drilling fleet.

From the Minister’s perspective, this significant growth in the number of drilling rigs translates into a rise in the number of new wells and an acceleration of upstream oil and gas development in the country, which—beyond boosting production—will generate a sustainable flow of revenue and employment.

Regarding the second contract, namely the purchase of crude oil processing services, Paknejad maintains that “the construction period for the relevant units is about 15 months, which—compared to the development of permanent processing units that, even under optimistic assumptions, take 36 months—is a positive step toward improving and accelerating the exploitation of oil fields.”

“With the implementation of the aforesaid contracts by the private and non-governmental sectors, new processing capacity of 315,000 b/d will be created for the country. This capacity will prevent a production decline of 180,000 b/d, while crude oil production will surge by 135,000 b/d,” he said.

Designing innovative contractual frameworks, the oil industry has paved the way for private and non-governmental actors to play a role in the oil industry upstream sector—an area that was once exclusively dominated by major oil companies with vast capital. Accordingly, Paknejad regards guidance, oversight, and facilitation as the three key pillars through which the oil industry is

unlocking investment, fostering technology development, and creating sustainable employment.

With the Ministry of Petroleum moving to attract private-sector participation and cooperation through such contracts, and with the strong emphasis placed on realizing overarching policies to support the private sector and increase production, it appears—according to Paknejad—that this path represents the future of Iran’s oil industry: a path in which the government acts as an enabler and regulator, the private sector serves as the driving force, and the ultimate outcome is the strengthening of national power and the social welfare of the Iranian people.

12% Share in Crude Sales

Amir Moqiseh, the NIOC director of investment and business, said: “With the implementation of these contracts in the fast-track, factory-built (skid-mounted) equipment projects under a public-private partnership (PPP) model, 12% of the country’s crude oil processing will be carried out by the private and non-governmental sectors.”

It is noteworthy that in the past, EPC contracts traditionally signed for crude oil processing units, with a contractual duration of three years; however, in practice, their implementation often took more than five years. The Ahvaz Centralized Processing Unit and the Central Treatment/Export Plant (CTEP) of the South Azadegan field are among such projects.

However, the construction period for fast-track skid-mounted equipment under PPP contracts is less than two years. These contracts have a ten-year duration, and under Article 20 of the 7^th Development Plan Act and Article 40 of Financing the Production of Infrastructure Act, governmental bodies are obliged to assign eligible partnership projects to investors within PPP framework.

In comparing these two types of contracts, it could be argued that the new model is more attractive to the private sector due to its shorter timeline, enabling investors to reach returns more quickly. At the same time, faster project execution benefits the government and the Ministry of Petroleum by allowing them to increase production sooner, said Moqiseh.

Another important point regarding the contracts is that, in the first phase of PPP agreements, the processing of 115,000 b/d of crude oil for the Mansouri (Asmari), Qaleh Nar, Kabud, and Balaroud fields was assigned to investors. In the second phase, six contracts were defined, covering the following fields and capacities: Mansouri (Bangestan) with 65,000 b/d, Ab Teymour with 30,000 b/d, Ramshir with 55,000 b/d, Karanj with 55,000 b/d, Golkhari with 60,000 b/d, and Mansourabad with 50,000 b/d.

Overall, it could be stated that in line with strengthening and enhancing oil production, as well as supporting and engaging the private sector in oil projects, the Ministry of Petroleum has signed two contracts with domestic companies: the guaranteed purchase of drilling services and the purchase of crude oil processing services for oil fields. These two contracts will lead to a rise in the number of new wells and accelerate upstream oil and gas development, which—beyond boosting production—will create a sustainable stream of income and employment in the country. Through signing these contracts under a PPP model, NIOC seeks to achieve the quantitative targets set out in the 7^th Plan, including reaching a crude oil production capacity of 4.8 mb/d, raw gas production of 1.340 bcm/d, and the realization of 8% economic growth.

In line with the overarching objectives of the 7^th Development Plan, the 14^th Administration has also resolved to ease barriers to the participation of private companies and economic actors. Going forward, we should therefore expect a broader presence of private firms in Iran’s oil industry—an outcome that is unavoidable given the intensifying international sanctions. Relying on domestic capital and human resources may further steer the country’s engine of progress toward sustained development.

Contract Details

The most important feature of signing these two contracts is the emphasis on private-sector participation and investment in the development of the petroleum industry. The contracts were signed in the areas of the onshore drilling rig supply project and the purchase of crude oil processing services for oil fields.

One of the most critical components of upstream oil industry development is drilling. Accordingly, as a first step, the NIOC signed a contract for the guaranteed purchase of drilling services with six companies to supply 20 onshore drilling rigs with a capacity of 2,000 horsepower, valued at around $1 billion. Under this contract, 270 new wells are scheduled to be drilled over a five-year period with the aim of maintaining and increasing Iran’s oil production.

Petroiran Development Co. (PEDCO) with four drilling rigs; North Drilling Company (NDC) with four rigs; Oxin Petroleum Co. – Middle East (OPC) with four rigs; Iranian Army Resilient Economy Organization with two rigs; Paydar Energy Kazerun Company with four rigs; and Global Petrotech Kish Company with two rigs are the six investor entities that signed PPP contracts with NIOC. Under the terms & conditions of these contracts, they are required to procure the drilling rigs from abroad within a six-month period.

The second contract pertains to the purchase of crude oil processing services aimed at increasing crude oil production from the Mansouri (Bangestan), Ab Teymour, Ramshir, Mansourabad, Karanj, and Golkhari oil fields. Under this plan, the NIOC will purchase crude oil processing services through build-own-operate (BOO) contracts with a ten-year term.

Under this contract as well, several investor companies have entered the field of crude oil processing services for oil fields. Tasha Machine Manufacturing Company will process crude oil from the Mansouri (Bangestan) field; Pars Petro Zagros Company from the Ab Teymour field; Oxin Petroleum Middle East from the Ramshir field; Axon Group from the Karanj field; Chegalesh Company from the Golkhari field; and Tana Energy Company from the Mansourabad field. These six companies are the investors, and the total value of the contracts signed between them and the NIOC amounts to $1.671 billion.

With the implementation of these contracts by the private and non-governmental sectors, new crude oil processing capacity of 315,000 b/d will be created for the country. Accordingly, under these six contracts and the two previously concluded contracts with the private sector, a total of 430,000 b/d of crude oil processing has been delegated to the private sector. Of this amount, 190,000 b/d is attributable to increased production, while 240,000 b/d pertains to production maintenance and oil quality enhancement. Over a ten-year period, the implementation of these projects is expected to generate revenues of approximately $70 billion and create job opportunities for more than 7,000 people in less-developed regions.

New Refining Policy: Higher Quality, Reliable Supply

National Iranian Oil Refining and Distribution Co. (NIORDC), within the framework of the 14^th Administration’s program, is simultaneously pursuing the upgrading and quality enhancement of the refining industry alongside the development of transportation infrastructure and the strengthening of metering systems. The operation of new projects, the implementation of major ongoing plans, and the focus on improving oil products’ quality indicate that the main strategy of this sector of the oil industry is to move beyond mere capacity expansion and toward increased efficiency, network sustainability, and higher production standards.

Investment Plan

A review of the official data shows that NIORDC has based its approach to expanding capacity and upgrading the quality of the refining industry on careful monitoring and targeted prioritization of projects. Within this framework, 27 refinery and petrorefinery development projects holding feedstock licenses were evaluated, and ultimately seven projects were selected as priority projects for completion.

This package includes the South Adish, Mehr Persian Gulf, Makran Bakhtar, Pishgaman Siraf, Ghadir Hormozgan, Javid Energy Parto, and Pars Behin Qeshm projects. The total investment volume for these projects has been announced at €3.1 billion, and their commissioning will enhance national refining capacity by 550,000 b/d. The selection of these projects indicates that the focus of the refining development program is on projects that will have the greatest impact on capacity and the balance of product supply in the short and medium term.

Alongside this development path, upgrading the quality of existing refineries is being pursued as the second pillar of the program. In this area, seven priority projects have been defined across five refineries nationwide, which, according to the plan, will be commissioned by the end of the 14^th Administration’s term. The remaining investment for this package is estimated at around €4.2 billion, and its objective is to modernize process units, raise product standards, and increase operational efficiency in the country’s active refineries—a path that creates greater value added in production without enhancing nominal capacity.

At the same time, as a complementary link in this program, upgrading metering and monitoring systems has also been placed on the agenda. In this area, five projects—comprising four projects at the Mahshahr export terminal and one project at the Shazand Refinery—have so far been launched with an investment of $10 million, and similar operations are underway at seven other locations by Iranian Oil Pipelines and Telecommunications Company (IOPTC). Other sites are also in the design and permitting stage within the framework of four projects and 18 work packages.

Taken together, these measures effectively lead to the establishment of a “common metering language” at delivery and receipt bottlenecks—an infrastructure that enhances the transparency of operational data and strengthens the basis for more accurate decision-making in the production, transmission, and distribution of oil products.

€840mn Projects

In the first year of the 14th Administration’s tenure, a series of key projects with a total investment of around €840 million have been commissioned. These projects simultaneously target two layers—the “product transportation infrastructure” and “refinery processing units”—and present a coherent picture of balanced development across the downstream value chain.

In the field of transportation, the commissioning of the Bandar Abbas-Rafsanjan pipeline, with a length of 455 kilometers and a capacity of 300,000 b/d, is considered one of the most important components of this package. This capacity has increased the operational capability of the network in moving petroleum products and enhanced distribution flexibility. At the same time, the Sabzab–Shazand pipeline has also been brought into operation, and the connection of six new power plants to the product transmission pipeline network has been recorded—an action that strengthens the continuity of fuel supply at power plant consumption points. Meanwhile, the commissioning of the Goreh-Jask branch pipeline to supply feedstock to the Bandar Abbas refinery has completed the feed-supply loop of this infrastructure package.

Alongside the development of the transmission network, the processing segment has also been active simultaneously. The commissioning of the Shiraz Refinery isomerization unit and the Abadan Refinery hydrocracker unit, together with the transmission projects, highlights a model of “quality upgrading concurrent with infrastructure development.” Under this model, expanding network capacity without improving product quality, and improving quality without strengthening the transmission chain, does not achieve maximum effectiveness.

Focus on Oil Products’ Quality

In the next phase of development, NIORDC has announced the implementation of strategic projects worth approximately €2 billion. These projects are scheduled for completion by the end of the current calendar year and focus on improving the quality of refined petroleum products and completing key links in the transmission chain.

Within this framework, the South Adish Refinery and the Mehr Khalij Fars Refinery projects are in the implementation phase. At the same time, quality-upgrade projects—including diesel quality improvement at the Shiraz Refinery, kerosene hydrotreating (KHT) at the Isfahan Refinery, and the gasoline production project at the Tehran Refinery—are underway with the aim of improving oil products’ standards. Together, these initiatives focus on enhancing quality, aligning production with environmental requirements, and increasing the value added of petroleum products.

Alongside this quality-focused pathway, the development of transmission infrastructure is also progressing in parallel. The construction of the Tabriz-Khoy-Urmia pipeline is in the operational phase, and the connection of the Samangan Sirjan, Taban Yazd, and Lushan Gilan power

plants to the oil products’ transmission network is underway. Overall, these projects not only enhance the network’s operational capacity but also contribute to supply stability and the reduction of operational risks during peak demand periods.

Quality Upgrade

As refinery development programs move beyond the design and contracting stages, the main focus has gradually shifted toward the operational outcomes of the projects—outcomes that are reflected not in broad objectives, but in product quality, the composition of the production portfolio, and measurable indicators. Within this framework, a series of quality-upgrading projects at various refineries across the country have either been commissioned or are in their final stages of implementation, offering a more tangible picture of the path toward upgrading the refining industry.

At the Shiraz refinery, the isomerization unit was commissioned in November 2024 with a capacity of 5,000 b/d, a unit that plays a direct role in improving the quality of gasoline produced at the refinery. With the commisioning of this unit, the gasoline octane number has increased from 87 to 91; benzene content has been reduced to below 1%, aromatic compounds to under 35%, and sulfur in gasoline to less than 2 ppm. The nominal capacity of the unit has been announced as 795,000 l/d, while its current production stands at 540,000 l/d. The operational outcome of this project has been the Shiraz refinery’s achievement of 1.65 ml/d production of Euro-5 standard gasoline.

At the Shazand refinery, the needle coke production project—considered one of the flagship technological initiatives of the country’s refining industry—is currently under implementation. The project comprises five main units, four of which have been designed using indigenous technology in cooperation with the Research Institute of Petroleum Industry (RIPI). In addition to eliminating fuel oil and other heavy, polluting fuels from the refinery’s product slate, implementation of this project will reduce sulfur dioxide emissions by approximately 500 tonnes per day. Needle coke production at this refinery is also defined as a link in completing the country’s steel value chain, and all stages of its design and construction are being carried out by domestic companies.

At the Persian Gulf star Refinery, a project to construct an ammonia unit is being pursued in order to complete the utilization chain of process streams. With a capacity to receive 450,000 b/d of gas condensate, the refinery produces a wide range of oil products, including gasoline, diesel, and liquefied petroleum gas (LPG), kerosene, various solvents, hydrogen, and sulfur. Given that part of the produced hydrogen is currently sent to the flare, the ammonia unit construction project has been defined. Its preliminary approval has been obtained, and the stages of securing the process technology, carrying out basic design studies, and preparing the feed package documents and EPC tender documents are currently underway.

At the Tabriz refinery, the four-part diesel quality improvement package—comprising a diesel hydrotreating unit, hydrogen pressure swing adsorption (PSA), sulfur recovery (SRP), and tail gas treatment (TGT)—has been commissioned with an investment exceeding €120 million. With the implementation of this package, Euro-5 diesel production has increased from 2 ml/d to 5 ml/d, while sulfur production capacity has simultaneously reached 110 tons per day. As one of the main fuel suppliers for northwestern Iran, the Tabriz refinery has pursued the implementation of these projects to enhance oil products’ quality and align with regulatory requirements.

At the Abadan refinery, a hydrocracker unit with a capacity of 42,000 b/d has been commissioned. As the largest hydrocracker unit in West Asia, it represents the final link of the first section of Phase II of the refinery’s capacity expansion and stabilization project. With the commissioning of this unit, a portion of the refinery’s fuel oil production has been reduced, and converted into higher value-added products: LPG, sweet light and heavy naphtha, jet fuel, and Euro-5 diesel. Within this project, sulfur recovery and solidification units with a combined capacity of 630 tonnes per day, as well as safety systems and elevated flare stacks, have also been brought into operation.

Environmental Obligations

Alongside efforts to improve product quality, a series of environmental protection and monitoring projects are being implemented or have already been commissioned simultaneously at refineries across the country. The TGT unit at the Shiraz refinery, with an investment of $27 million, is under construction and has reached 75% physical progress. At the same time, the TGT unit at the Tabriz refinery, with a cost of IRR 158 billion and €5.16 million, as well as the SRP unit at this refinery with an investment of €23.1 million, have been commissioned. At the Isfahan refinery, FGR projects and flare system modifications, with an investment of IRR 518 billion and €6.8 million, are underway with 69% physical progress. In parallel, the installation of online monitoring stations and analyzers is being pursued, with progress levels of 90% and 75%, respectively.

These projects have been defined with the aim of reducing pollutants, controlling exhaust gases, and ensuring continuous process monitoring. They demonstrate that the refinery industry’s quality improvement program is not limited solely to enhancing final products, but is simultaneously moving toward strengthening environmental controls and operational oversight.

What emerges from considering these projects together is a picture of a gradual yet meaningful shift in the development of the refining industry—a shift in which “capacity figures” alone are no longer the sole measure of progress. Product quality, supply chain sustainability, and the transparency of operational data have become equally important. From isomerization and hydrocracker units to pipelines, metering systems, and environmental projects, are all defined along a common path: reducing losses, increasing reliability, and aligning production with up-to-date standards.

Within this framework, the country’s refining industry is moving beyond a stage in which development was pursued in a fragmented, siloed manner. The linkage between refineries, the transmission network, power plants, and monitoring systems indicates that the prevailing approach is shifting toward integrated management of the downstream value chain. If sustained, this approach may enhance not only product quality but also the resilience of the national fuel network in the coming years, elevating refining from a purely production-oriented function to a strategic pillar of energy security.

NISOC Overhaul Plans on Track

National Iranian South Oil Co. (NISOC), which is the largest subsidiary of National Iranian Oil Co. (NIOC), is responsible for producing a major portion of Iran’s hydrocarbon resources. The company operates 45 fields and 65 hydrocarbon reservoirs of various sizes across an area of more than 70,000 square kilometers, extending from Bushehr Province to northern Khuzestan Province. This vast oil-rich region includes large and strategic fields such as Ahvaz, Gachsaran, Marun, Aghajari, Karanj, Parsi, and Bibi Hakimeh.

NISOC alone currently accounts for 80% of total crude oil and 16% of gas production in Iran.

Given the geographical extent and the volume of technical and industrial equipment in operation, maintaining stable production and operational conditions in the oil-producing regions requires regular and periodic overhaul. For this reason, paying special and fundamental attention to periodic maintenance planning is of vital importance for the managers of these regions.

Overhaul Role in Sustainable Supply

Omid Kiani, head of the Industrial Equipment and Process Machinery Maintenance Directorate of NISOC, in an interview with “Iran Petroleum”, underscored the strategic role of this Directorate in sustainable oil and gas production.

Referring to coherent planning for the overhaul of heavy and processing equipment within NISOC, he said: “This department is responsible for carrying out overhauls of rotating machinery with power ratings above 4,000, as well as all fixed equipment—including vessels, heat exchangers, process units, compression stations, and LPG plants—across NISOC-run areas.”

He noted that the overhaul program is developed annually based on estimates of workload and the operational requirements of the coming year, adding that, under this program, the number of compression stations, LPG facilities supplying feedstock to petrochemical plants, as well as production and desalting facilities are identified and carefully scheduled.

Kiani also touched on the role of central workshops, saying: “The two central workshops in Ahvaz and Aghajari operate as the main support arms for major overhauls. The Aghajari Central Workshop, in particular, has been equipped for approximately 30 years to carry out major overhauls of Rolls-Royce and Solar turbines, and in the past was recognized as a Rolls-Royce-licensed workshop in the Middle East.”

Underscoring significant progress made in the local manufacturing of the sensitive components of turbines, he said, “In the past, there was a high level of dependence on foreign parts; however, today, relying on the capabilities of domestic knowledge-based companies, a major portion of sensitive turbine components—especially those made from advanced superalloys—is produced domestically.”

“To date, out of the 19 turbines installed in the Ahvaz area, 12 have undergone major overhauls through outsourcing and by leveraging the capabilities of domestic knowledge-based companies, and are currently in operation. This demonstrates the country’s achievement of the technical know-how required to manufacture and overhaul high-tech equipment,” he said.

Noting preventive approach in overhaul, Kiani said: “One of the main pillars of planning was institutionalizing a culture of anticipation and proactive maintenance. For example, in the area of crude oil preheaters—which play a key role in the desalting process and in improving oil quality, especially during the cold season—timely forecasting made it possible to overhaul and prepare approximately 18 to 19 preheaters for operation before the onset of winter. This measure played an effective role in maintaining production stability.”

Overhaul 88% Done

Kiani also offered statistics about the current calendar year (to March 2026), saying: “During this year, a total of 1,616 work orders were assigned to the Directorate of Maintenance, of which 1,288 were ready for handover by the operating companies. Of these, 1,143 work orders were executed by the end of the first eight months of the year, representing an 88% achievement of the plan. This figure is considered a record in the history of overhauls in NISOC-run areas.”

On desalting and production equipment, he said: “In this section, out of a total of 670 work orders issued during the first eight months of the current year, more than 96% of the operations was successfully completed.”

Kiani underscored the significance of safety in overhaul, saying: “By deploying young personnel alongside experienced staff and ensuring effective transfer of knowledge, fortunately no serious incidents have occurred in major overhaul operations to date. This success is the result of experience, training, and strict adherence to safety requirements in one of the highest-risk operational areas of the petroleum industry.”

He said major projects came online in the first half of the current calendar year, adding: “During this period, several landmark initiatives were implemented across NISOC-run regions that had a direct impact on production stability. One of the most important projects was the major overhaul of large cluster tanks at the Ahvaz and Marun desalting units. These tanks, which are among the largest process vessels in NISOC-run areas, are instrumental in the separation of water and oil and in maintaining the quality of export crude oil.”

“By adopting modern

approaches—such as using MFL technology to monitor tank bottoms and designing engineered structures as alternatives to traditional scaffolding—we were able to significantly reduce maintenance time. As a result, a tank that was expected to be out of service for several months was returned to the production cycle in a much shorter period, leading to a noticeable increase in oil production across NISOC-run regions,” said Kiani.

He went on to highlight the performance of this Directorate in gas compression and injection, saying: “At some stations, overhauls must be carried out in full within a limited timeframe. Through intensive planning and the implementation of special measures, we succeeded in reducing the maintenance duration at certain stations from 25 days to 14 days.”

“This reduction in time translates into significant savings in gas consumption, reduced flaring, and the prevention of the loss of millions of cubic feet of gas per day, resulting in important economic and environmental benefits for NISOC-run areas and the city of Ahvaz,” he said.

“During the current calendar year, the overhaul of 36 plants and compression stations was assigned to the Directorate of Maintenance. Of these, 22 units were ready for handover by the end of the first eight months of the year, and I am proud to announce that all 22 units were successfully overhauled and returned to the production cycle,” he said.

Referring to the targeted outsourcing of rotating machinery maintenance, Kiani said: “Due to the accumulation of work and the high complexity of repairing turbines and compressors, part of the rotating equipment maintenance operations was outsourced to Iranian contractors. At present, dozens of active contracts are being carried out under the direct supervision of this Directorate’s engineers, and all processes are conducted under strict technical and quality control.”

63% Objectives Reached

He explained the Directorate of Maintenance’s performance in implementing the plans approved by the Directorate of Production for the current year (to March 2026), saying, “According to the planning carried out, after eight months about 47% of the maintenance programs were expected to be achieved. However, based on the statistics recorded in the maintenance system, the level of achievement has exceeded 63%, indicating a 16% advance over the approved plan.”

According to the “Performance Report” for the first eight months of last calendar year issued by the Directorate of Maintenance, the volume of planned operations indicates a highly intensive and exceptionally heavy commitment. Considering the scale of these operations, the cost of implementing this massive program has exceeded IRR 100 trillion. This figure reflects a strategic and substantial investment in maintaining and upgrading the region’s vital operational infrastructure.

The scheduling of this volume of maintenance work is itself an indication of a deep managerial understanding of the logic of the production process. A major portion of the maintenance work orders (around 70%) was deliberately scheduled for the first half of the year. This approach is fully grounded in the physical characteristics of the region’s production process, as the high air temperatures in Khuzestan during this period reduce oil viscosity and thereby facilitate processing operations.

These measures represent a smart tactical execution. The main objective is to ensure that by carrying out major overhauls during the hotter months—when physical conditions are more favorable—all facilities enter the colder months with the highest levels of efficiency and operational readiness, a period during which production is expected to operate at its maximum nominal capacity.

Overall, the Directorate of Maintenance of NISOC has played a pivotal role in ensuring the sustainable development of production by relying on the expansion of internal capabilities and the successful implementation of key maintenance initiatives. This performance has tangibly strengthened operational stability, even under the challenging climatic conditions of southern Iran.

NGL 800 Production Stable After Overhaul

The head of overhaul at Karun Oil and Gas Production Co. (KOGPC), Jahanbakhsh Hosseinpour, has said the overhaul of the vital gas and natural gas liquids (NGL 800) unit, located near Ahvaz, has been on schedule and successfully completed. This important project, carried out with the aim of enhancing safety standards, increasing operational reliability, and maintaining the long-term efficiency of the equipment, reflects the organization’s continued efforts to preserve the integrity of key infrastructure in the oil and gas industry.

The NGL 800 unit is located on the outskirts of the city of Ahvaz—an industrial complex that, from the very moment of arrival, asserts its presence on visitors with the deafening roar of its turbines. This constant noise indicates that despite limitations and the need for maintenance, the production cycle remains active.

On the day of the visit, 16 December 2025, the weather was foggy and unusually cold for Ahvaz. A gentle chill swept through the site, and this contrast between the cold air and the warmth of the sun led some workers and staff, after midday, to stroll under the trees on the premises or in open areas.

The factory’s entrance is marked by a green gate, above which the Iranian flag and the flag of KOGPC are installed. The route leading to the unit is a tree-lined boulevard, alongside which orange-colored pipelines extend from the entrance deep into the facility.

Asked to detail the NGL 800 unit, Ebrahim Hosseini, an overhaul director at National Iranian South Oil Co. (NISOC), said: “Within this facility, the 700 and 800 units are located side by side. Although they are similar in terms of overall structure, they differ in the number of process trains: one has three trains and the other two. In terms of function, these units are similar to some older facilities such as Fajr Jam, with the difference that gas sweetening is not carried out here and the main focus is on the separation of gas condensates.”

“The incoming gas is transferred to this plant after passing through various stages of pressure boosting. Here, the gas enters the process cycles and, by passing through compressors and chillers, is cooled so that gas condensates are separated from the lighter gas. The lighter gas, consisting of methane and ethane, is sent after separation to NIGC, with part of it also supplied to Marun Petrochemical Plant. In contrast, the gas condensates are pumped toward Bandar Imam to be used in the downstream value chain,” he added.

Explaining the location of this unit, Hosseini said: “On the right side of the site, two completely identical trains can be seen, each capable of receiving about 20 mcf of gas, together covering a total capacity of 40 mcf. The equipment, routing, and process cycles of these two trains have been designed to be entirely the same, indicating a standardized approach in the design of process units.”

During the visit, part of the unit was undergoing a major overhaul. Scaffolding erected around the pipes and industrial structures indicated that repair and equipment reinforcement operations were still in progress. Some areas were marked with yellow warning tape—zones where entry is prohibited due to process-related hazards.

Within the plant area, the smell of gas is clearly noticeable—a scent that makes the atmosphere somewhat heavy and serves as a reminder of the importance of observing safety precautions. Warning signs for gas hazards, diesel fuel, and flammable materials are installed throughout the site. Employees move around the area wearing hard hats and personal protective equipment, and all of them carry identification cards.

Although the number of workers present on the site did not seem large, the constant noise of the units and the operation of the equipment indicated that production had not stopped and the plant remained online. According to maintenance officials, the major overhaul operations include opening and closing valves, measuring the thickness of vessels, conducting hydrostatic tests on heat exchangers, and performing major overhauls on compressors—measures undertaken to maintain safety, enhance production stability, and prevent unplanned shutdowns.

This industrial complex is considered one of the key links in the production chain and the supply of feedstock for petrochemical industries—wherein the sound of turbines, the smell of gas, and the slow yet continuous movement of the facilities tell the story of sustained production amid challenging operational conditions.

Accident-Free Overhaul

In an interview with “Iran Petroleum”, Hosseinpour referred to the precise scheduling of the unit’s major overhaul operations and said, The operations began on 16 October 2025 and were completed over a 45-day period, with the participation of approximately 18,000 person-day of work. Ultimately, the unit was handed over to the operator for start-up in accordance with the planned schedule.

He described the scope of the activities carried out as extensive, adding: “During this overhaul, important work was performed on storage tanks, air- and ground-mounted heat exchangers, electric motors, process equipment, the glycol unit, equipment thickness measurements, as well as all process and safety valves, all of which were successfully completed.”

“The unit’s inlet consists of 120 mcf/d of gas and 9,000 b/d of gas liquids. Its daily output is about 25,000 b/d of liquids and 85 mcf/d of gas, which are supplied as feedstock to the Maroon and Mahshahr petrochemical plants, playing an important role in the production of a wide range of petrochemical products,” Hosseinpour said.

He said the facility covered 3 ha of land, adding: “In addition to the main overhaul program, and at the operator’s request, a major overhaul of the Elliott compressor in Unit One was initiated off schedule. This part of the work is still ongoing.”

Emphasizing full compliance with safety requirements prior to start-up, he said: “Compression, deoxygenation, leak detection, and the elimination of any potential leaks were all carried out in full, and after start-up, the unit was handed over to the operator without any incidents.”

“Carrying out overhauls, in addition to increasing safety levels and operational reliability, enhances unit efficiency and ensures the continuity of stable production. These measures minimize the risk of unplanned shutdowns caused by equipment failures and improve the quality of output products,” said Hosseinpour.

Stressing the need to use domestic potential, he said: “In the overhaul of the Elliott compressors, a large portion of the technical requirements was met through cooperation with domestic companies and the use of locally manufactured parts—an effective step toward leveraging internal capabilities and reducing dependence on foreign sources.”

The successful major overhaul of the Ahvaz NGL 800 unit—that embodies sustained production and self-reliance under challenging conditions—was achieved through precise time management, full compliance with safety requirements, and reliance on the expertise and capabilities of domestic engineers and contractors, along with the use domestically manufactured parts. This success ensures the continued flow of gas and gas condensates to downstream industries on the eve of the winter. Moreover, by significantly increasing operational reliability and minimizing the likelihood of unplanned shutdowns, KOGPC has once again reaffirmed its vital role in maintaining the stability of the energy chain and securing feedstock for the country’s petrochemical industry.

Ilam Refinery Sees Sustainable Energy Development

The Ilam gas refinery, as the only gas treatment facility in western Iran, was established to supply natural gas, boost pressure in the national trunkline, and provide feedstock for downstream industries. With the completion of its second development phase, it has now become one of the Ministry of Petroleum’s key strategic projects for ensuring stable gas production. With the commissioning of this phase, the refinery’s gas-processing capacity will increase from 6.8 mcm/d to about 11 mcm/d, and the production of its five major products will grow by up to 50%.

Current Capacity

Since its commissioning in 2007, the Ilam gas refinery has been central to supplying gas to western Iran and providing feedstock to the Ilam Petrochemical Plant. The refinery receives 6.8 mcm/d of rich gas from the Tang Bijar field and, after processing, injects 5.8 mcm/d of sweet natural gas into the national grid.

Other products include 270 tonnes of sulfur with 99.98% purity, 750 tonnes of raw LPG, 420 tonnes of ethane, and 7,500 barrels of gas condensate.

Rouhollah Nourian, the CEO of the Ilam Gas Refining Co. (IGRO), said: “By supplying the three main feedstock – ethane, LPG, and condensate – to Ilam Petrochemical Plant and by playing a key role in balancing pressure in the gas network, the Ilam refinery is one of the pillars of energy-supply stability in western Iran.”

Last winter, the refinery remained in operation with 99.4% reliability and fulfilled all of its production-plan commitments without any pressure fluctuations. Nourian adds: “During the cold season, in cooperation with National Iranian Gas Co. (NIGC), we experienced no interruptions in gas production or transmission.’”

Phase II Development

The Ilam gas refinery, whose first phase was commissioned in 2007 with a processing capacity of 8.6 mcm/d of sour gas, was from the outset designed to supply the province’s consumer gas needs as well as feedstock for the Ilam petrochemical plant. At that time, the main focus was on receiving, sweetening, and sending sour gas to the national grid, while the condensate stabilization and sulfur recovery units operated on a limited scale.

More than a decade after the successful commissioning of the first phase, and with the goals of ensuring a stable feedstock supply for the petrochemical plant, increasing gas exports to Iraq, and strengthening the downstream value chain, implementation of the second development phase was placed on the agenda in the early 2010s. This phase, which has had over 86% physical progress, increases the refinery’s total capacity by 50%, bringing it to more than 10.2 mcm/d of sour gas. It includes the construction of advanced condensate-stabilization units, state-of-the-art sweetening units, compression facilities, sulfur-recovery systems, and ethane-extraction units—a set of critical plants designed to ensure a stable feedstock supply for the Ilam Petrochemical Plant, boost gas-export capability, and maintain pressure stability in the national gas network.

While the first phase focused mainly on processing and delivering gas, the second phase goes a step further and, with the aim of enhancing value added and developing downstream industries, increases the production of natural gas, ethane, raw LPG, gas condensates, and sulfur by about 50%.

“In addition to boosting production capacity, the implementation of the second phase will make a significant contribution to job creation in the province, strengthening the regional economy, and generating sustainable added value within the country’s gas value chain,” Nourian said.

Over 76% of the equipment for this phase has been supplied from domestic production. All stages-design, engineering, construction, and implementation- are being carried out by local specialists. The Ilam refinery, which processes sour gas with a high concentration of H₂S, is advancing without getting help from foreign experts and relying on indigenous technology, standing as a symbol of the Iranian gas industry’s self-sufficiency in the field of refining and energy-infrastructure development.

Productivity Up

Last calendar year (to 21March 2025), despite a one-percent increase in feed received from upstream fields, the Ilam gas refinery succeeded in significantly boosting the production of its key products; natural gas grew by 3%, ethane by 4 percent, raw LPG by 14%, gas condensates by 2%, and sulfur by 4%.

Nourian described this performance as the result of targeted process and operational improvements in the production units, stating that the increase in output relative to feed intake reflects the direct impact of process-optimization strategies, equipment upgrades, and revised operating patterns on improving efficiency.

These achievements have been realized within the framework of the Petroleum Ministry’s program to increase the efficiency of the country’s gas refineries and in line with the government’s policies aimed at fulfilling the slogan of the year, ‘Production Growth and Inflation Control.’ In

addition to increasing production volume, they have also strengthened operational stability and reduced unplanned shutdowns.

The Ilam gas refinery also increased the supply of the three key feedstocks required by Ilam Petrochemical by eight percent, further solidifying its position as one of the most reliable gas-production units in western Iran.

Development Projects

Last calendar year (to 21March 2025), more than IRR 6,500 billion was invested in the implementation of the development projects and efficiency-enhancement initiatives at the Ilam gas refinery. A major portion of this investment was allocated to projects that directly contribute to improving production, enhancing safety, and reducing energy losses.

Among these projects are the commissioning of an off-gas compressor for flare-gas recovery, construction of a 63-KV power substation, implementation of a storage-tank fire-extinguishing system, commissioning of a heat-recovery steam generator (HRSG), and expansion of electronic-protection systems and the cold box, each forming part of the overall process of modernizing and stabilizing the refinery’s operational infrastructure.”

Alongside these projects, four major initiatives classified as ‘first-time fabrication’ have been defined and carried out, reflecting the refinery’s reliance on domestic capabilities and indigenous expertise. These initiatives include the design and manufacture of a coil-wound heat exchanger, the design and fabrication of an ultrasonic corrosion-monitoring scraper, the production of methyl diethanolamine (MDEA), and the development of corrosion-resistant coating technologies.

According to Nourian, the implementation of these projects marks a fundamental step toward the indigenization of technology and the elimination of dependence on imported critical equipment.

“Today, the Ilam refinery is one of the leading centers in advancing the policy of domestic manufacturing in the country’s gas industry, and the implementation of these projects has elevated domestic engineering capabilities to a higher level than ever before,” he said.

Witner Management 

Last year, through comprehensive overhauls and meticulous preparation, the Ilam refinery managed to remain fully operational without any disruptions. Major projects such as the commissioning of the PSA nitrogen-generation package, retrofitting of boilers and compressors, and the startup of the off-gas compressor enabled a significant volume of valuable gases to be saved from being flared.

According to official data, as a result of these initiatives, 5,600 tonnes of ethane, 14,000 tonnes of LPG, 5,000 tonnes of sulfur, and 26 mcm/d of natural gas that had previously been routed to the flare were recovered and returned to the production cycle. This achievement not only prevented resource loss but also reduced emissions and increased the economic value of production.

In pursuit of sustainable development, the Ilam refinery has placed several key environmental projects on its agenda. Among these are the flare-gas recovery project, now 60% complete; construction of a new cooling tower; recycling of industrial wastewater; and upgrades to process-control systems.

According to Nourian, these projects play an important role in reducing water consumption, lowering emissions, and improving energy efficiency, and once completed, will position the refinery among the environmentally responsible ‘green units’ of the country’s gas industry.

Local Economy

The Ilam gas refinery holds an important position in the province not only from a technical standpoint but also economically and socially. Since its commissioning, it has created hundreds of direct and indirect job opportunities and has paved the way for the development of downstream industries in the fields of petrochemicals, sulfur, and LPG.

According to Ahmad Karami, the provincial governor of Ilam, “The commissioning of the second phase of the Ilam gas refinery is an effective step toward completing the value chain and advancing the province’s economic development. This project serves as an infrastructure foundation for sustainable employment and industrial growth in western Iran.”

Today, the Ilam gas refinery stands on the threshold of a new stage of development. With the completion of the second phase and the implementation of environmental and indigenization projects, the refinery’s gas-processing capacity will reach 11 mcm/d, and the production of its main products will increase by up to 50%.

The refinery is now recognized as a symbol of reliance on domestic capabilities, energy stability, and balanced development in the country’s border regions. The continued advancement of development projects, improvements in efficiency, and stronger integration with downstream industries will transform Ilam into one of Iran’s new energy hubs, wherein gas is not only a source of energy supply, but also the driving force behind economic growth and prosperity in western Iran.

MOP Supports First-Time Manufacturing

Deputy Minister of Petroleum for Engineering, Research and Technology Omid Shakeri has said more than 80% of first-time manufacturing projects had been supported by the Ministry of Petroleum.

“Supporting domestic manufacturing has always been among the core policies of the Ministry of Petroleum,” he said.

Referring to the issuance of an internal directive for first-time production to facilitate manufacturers’ entry into the Approved Vendors List (AVL) and provide them with the required support, he added that over 80 percent of the country’s first-time production projects have been implemented with the support of the Ministry of Petroleum.

Touching on the hardships of industrial activities, Shakeri said: “For first-time manufacturers, financing amounting to IRR 50,000 billion has been provided through Rial letters of credit, and product insurance has been arranged via the Technology and Research Fund, enabling employers to use these products with confidence.”

For his part, Dadvash Hashemi Golfsefidi, director of commodity manufacturing at the National Iranian Oil Co. (NIOC) laid emphasis on the significance of economic growth. He continued as saying: “So far, six comprehensive development plans have been accomplished, and we are now implementing the 7^th Plan; however, to achieve higher economic growth with limited resources, a shift in mindset and a more focused approach to investment are required.”

“Allocating 30% of the resources of the National Development Fund of Iran (NDFI) to the energy sector could yield better results,” he said.

He stressed the need to concentrate first-time production within a centralized framework so that planning and policymaking may proceed with greater transparency.

Hashemi Golsefidi, also referring to the financial constraints faced by knowledge-based and private companies, said that these challenges must be addressed by defining clear mechanisms so that innovative ideas are not lost.

Petchem Production/Exports Up in 8 Months

The CEO of the National Petrochemical Co. (NPC) Hassan Abbaszadeh has said despite postwar conditions petrochemical production and exports had increased.

“This industry, across the oil and gas value chain from upstream to downstream, is responsible for reducing crude and semi-crude exports and for producing higher value-added products—an objective emphasized by both the President and the Minister of Petroleum,” he said.

He added that although the petrochemical industry was in a “yellow” status due to wartime conditions, its production levels nevertheless showed an upward trend.

“In the first eight months of the current calendar year, about 54 million tonnes (mt) of petrochemicals was produced in the industry. Had it not been for these special conditions, production would have been around 7 to 8 mt higher. The figure for the same period last calendar year was 53 mt,” said Abbaszadeh.

Noting that petrochemical exports had increased year-on-year, he said, “In the first eight months of last calendar year, 21 mt was exported, while this figure has reached 22 mt this calendar year—an increase of 1 mt in exports over the eight-month period.”

Regarding global markets, he said: “On average, the prices of petrochemical products have declined by about 8%. This decrease is due to various factors, including the dependence of some product prices on crude oil prices and Russia’s large-scale entry into regional markets.”

Flaring down 3 mcm/d in South Pars

Mehdi Shafi’ei Motahar, chief engineer at South Pars Gas Complex (SPGC), has announced reduced flaring of associated petroleum gas at the South Pars gas field.

“It is projected that flaring at this complex will be reduced to 3 mcm/d by March 2027, indicating a strong commitment to reducing environmental pollution and optimizing energy consumption,” he said.

Touching on reduced flaring projects at SPGC refineries, he added: “The flare gas reduction projects at the refineries of this complex are being pursued through tenders in two categories: procurement and implementation and sale of flare gases.”

“The overall progress of these projects exceeds 80% and they are scheduled for completion by March 2026. Given the 80% progress in procurement and project execution, the volume of flaring at the South Pars refineries has averaged around 6 mcm/d over the first nine months of the current calendar year, which is in line with the targets set for flaring reduction under the short-term projects,” he added.

Regarding flaring at the 9^th refinery, Shafi’ei Motahar said: “Fortunately, the project to procure key items for the ninth refinery, based on approvals adopted at SPGC to supply part of the required goods, has been in effect since October 2025 for a 12-month period. It is anticipated that, with the provision of the requested items for the ninth refinery, the level of flaring at the complex will decrease compared to the current level.”

He stated that the cumulative progress of the flare gas sales projects is about 36 percent, adding that, following the efforts of the task force of the senior leadership of the Ministry of Petroleum—and with a focus on the Coordination and Production Oversight Management of National Iranian Gas Co. (NIGC) to resolve legal and contractual challenges related to flare gas sales projects—it has been decided to extend the construction period of most of these contracts.

“The investor company for the flare gas sales contract at the eighth refinery will, in the near future, commission the flare gas collection and recovery project aimed at reducing flaring at this refinery, while the other investor companies at the first tenth refineries are currently procuring the required items and installing the relevant equipment,” said Shafi’ei Motahar.

Yaran Oil Output Capacity Up

Hossein Mohseni Zonouzi, the project manager of the Yaran field development, said with the surge in production from Well No. 15 and the start of drilling of the first well in the Fahlyan layer in the southern part of the field, the development program of this oil field has entered a new phase.

He stated that the increase in production from Well No. 15 in the southern part of the Yaran oil field was achieved following the installation of a new pump, with the aim of stabilizing and improving the well’s operating conditions. Based on the assessments conducted, the well’s sustained production is expected to reach about 1,800 b/d.

“Well No. 15 also has a higher production potential, and its final production rate will depend on operational conditions and reservoir behavior,” he said.

Referring to the progress of the pump installation operation at Well No. 15, Zonouzi stated that the average duration of such operations is typically about 21 days, but the pump installation at this well was completed within 17 days and in accordance with the schedule.

“The drilling of Well No. 19 in the Yaran field is underway as part of the field’s development program, with the aim of evaluating and producing from the Fahlyan layer, and it is considered the first Fahlyan-layer well in the southern part of the Yaran field,” he added.

Recalling the results obtained from drilling operations carried out in the Fahlyan layer in the southern part of the Azadegan field, he added that based on the available data from this layer, assessing its conditions in the southern part of the Yaran field has also been placed on the agenda.

“The drilling and completion operations for Well No. 19 will continue according to the planned schedule until the end of the current calendar year, after which the subsequent phases related to production will be pursued,” said Zonouzi.

South Pars Gas Recovery at 725 mcm/d

Minister of Petroleum Mohsen Paknejad has announced a record 725 mcm/d recovery of gas from the massive offshore South Pars gas field which Iran shares with neighboring Qatar.

“This area is the first link in the country’s chain of gas production, processing, transmission, and distribution. Employees of Pars Oil and Gas Co. (POGC), through round-the-clock and demanding work under harsh conditions on offshore platforms, produce gas and deliver it to the nation so that homes remain warm, industry continues to operate, added value is created in sectors such as petrochemicals, and other defined gas consumption needs are met,” he said.

Referring to the fact that over the past approximately 14 months, through the efforts of POGC staff, 13 new wells have been drilled in the South Pars field, adding about 22 million cubic meters per day to the country’s raw gas production, he said: “Given the energy imbalance the country is facing, this rise in production is considered significant.”

“Based on the plans in place, it is anticipated that by March 2026, about four additional new wells will come on stream under the infill drilling program. Taking these wells into account, the total increase in production from South Pars is expected to reach around 30 mcm/d,” Paknejad said.

Emphasizing that achieving such a level of gas production in the South Pars field is unprecedented compared to previous years, he referred to his visit to the South Pars Platform 13A and stated that about 10 years ago. The platform had effectively gone out of production due to a vessel collision, but through the efforts made by POGC staff, the structural issues of the platform have been resolved.

“At present, infill wells are gradually being drilled, and as these wells come on stream, upstream gas production will be strengthened,” Paknejad said.

Referring to the operation of the damaged processing train at the Fajr Jam Refinery, he said, “This train was hit in Khordad of this year, but our colleagues at NIGC and the Fajr Jam Refinery were able to bring it back into the production cycle within six months, which is considered a very valuable achievement.”

“With the restart of this processing train, the country’s gas processing capacity has increased by about 13 mcm/d,” said the minister.

New Jacket Installed at SP11

Keyvan Tariqati, director of Phase 11 development of South Pars, has announced the installation of the second jacket in this development phase of the giant gas field.

“The SPD11A wellhead jacket, standing nearly 77 meters high and weighing 2,257 tons, was loaded and transported to the reservoir block of Phase 11 of South Pars and installed at the Iran-Qatar maritime border in the Persian Gulf by the HL-5000 installation vessel, in cooperation with Petropars. The jacket will be secured in its final position with the commencement of pile-driving operations,” he said.

Referring to the construction of this jacket in less than 15 months at the yard of Iran Marine Industrial Company (SADRA), he added that 840,000 persons-hours of work completed without any accidents to build the structure, which is considered the final jacket of the 24-project package of the South Pars field.

Tariqati described the placement of the second jacket of this phase as a prerequisite for positioning the drilling rig and starting drilling operations at the border location SPD11A, stating that 15 wells are planned to be drilled at the second location of Phase 11 of South Pars, which, once completed, will bring rich gas production from this phase to its nominal capacity.

The development project of Phase 11 of South Pars has been awarded to Petropars under the new petroleum contract (IPC) model, with Pars Oil and Gas Co. (POGC) acting as the client on behalf of the National Iranian Oil Co. (NIOC). Under this project, the extraction of 2 bcf/d of rich gas has been targeted.

HSE, Strategic Requirement for Oil Exports

The CEO of the Iranian Oil Terminals Company (IOTC) Abbas Assadrouz has highlighted the strategic role of the Kharg Oil Terminal in sustaining the country’s oil exports, saying, “The nature of this important mission requires that safety, health, and environmental protection be regarded as fundamental and non-negotiable requirements.”

“IOTC is responsible for the receipt, storage, measurement, berthing, loading, and export of the country’s crude oil and gas condensates at the operational areas of Kharg, Mahshahr, South Pars, Jask, and northern Iran. The nature of these missions necessitates that safety, health, and environmental protection be treated not as a ceremonial matter, but as a fundamental and non-negotiable requirement,” he said.

Outlining the evolution of safety and HSE culture worldwide, he stated that moving beyond reactive approaches and toward risk management, anticipation, prevention, preparedness, response, and recovery is an inevitable necessity. In today’s volatile, complex, and uncertain world, successful organizations are those that can maintain their resilience and agility by relying on a proactive approach.

Assadrouz noted that more than 90% of the country’s crude oil is received, stored, and exported through the Kharg terminal, stating that the safe and continuous operation of this terminal is tantamount to the continued production and export of Iran’s oil and the safeguarding of the country’s energy security.

Referring to the role of skilled, committed, and local human capital in achieving sustainable safety, he emphasized that targeted recruitment of HSE personnel, succession planning, adherence to professional principles, and reliance on collective wisdom have been among the serious approaches of the company’s management.

He touched on the measures taken in the field of passive defense and the diversification of the country’s terminals and export routes, adding that with the development of infrastructure on the mainland and in other operational areas, the continuity of the country’s oil exports has been made possible even under various conditions.

“At many critical junctures, operational decisions have been made based on analysis and acceptance of studied risks, with the aim of safeguarding national interests,” Assadrouz said.

Energy Operators Prove Profitable

Saeed Pakseresht, director of corporate planning of the National Iranian Gas Co. (NIGC), has said energy-operating companies have been profitable.

“Reducing gas consumption in the household sector, in addition to lowering costs, enables the transfer of energy to productive industrial sectors, and keeps the wheels of industry turning; this action is considered a win-win scenario for all,” he said.

Regarding the legal incentives for energy operator companies, he stated that the role of operator companies (energy operators)—which involves private sector participation—is to manage energy consumption for various consumers. This approach, which has a long global track record, acts as an intermediary between major energy suppliers and consumers.

“By implementing corrective measures among consumers (particularly household consumers), operator companies promote energy efficiency and help create the conditions for reducing energy consumption,” Pakseresht said.

Recalling that operator companies receive energy savings certificates in proportion to the reduction in consumers’ gas consumption compared to previous years—certificates that are tradable on the Iran Energy Exchange (IRENEX).  “For instance, while the price of one cubic meter of gas in the household sector may be something like IRR 2,000 or IRR 3,000, that same amount is valued at IRR 180,000 on IRENEX, he added. The price difference accrues to the operator, which benefits from it.”

Touching on the implementation of the pilot phase of this plan in the country, Pakseresht said that 27 operator companies are ready to launch the plan across all provinces. However, he noted that there are two types of contracts between NIGC and operator companies. The second type is the consumer demand management contract, while the first type is broader and more comprehensive than the second, as it allows operator companies to purchase gas in bulk.

He explained that under Type 1 contracts, operator companies receive gas at a specified delivery point, manage its distribution within a defined area or large complex, and sell it retail to consumers. He added that the volume of gas saved belongs to the operator company and can be sold on IRENEX. In this model, energy savings certificates are not the benchmark; rather, the purchase and sale of gas itself serves as the basis for transactions.

Biggest Refinery Overhaul in Mideast

The CEO of Imam Khomeini Oil Refining Co. Reza Cheraghi has given a successful assessment of the local overhaul of the refinery in the city of Shazand.

“This industrial complex, after carrying out the largest overhaul in the Middle East, was able to restore its production capacity to full levels and fundamentally resolve all past environmental issues,” he said.

“This massive project is a symbol of the capability and self-confidence of Iranian forces. We demonstrated that without relying on foreign resources, we can successfully complete a project of this scale, in such a way that many experts in the oil industry believe it can serve as a successful model of domestic capabilities for use in other industries as well,” he added.

Cheraghi said that the recent major overhaul was completed over three and a half months through the round-the-clock efforts made by domestic specialists. He added that in the design and implementation of the overhaul process, priority was given to reducing pollution and improving product quality; and that one of the main features of this overhaul was paying special attention to environmental issues.

He noted that new systems for controlling pollutants have been commissioned at the refinery, leading to a significant reduction in negative impacts on the surrounding environment and an improvement in the quality of the produced products. “Today, I proudly announce that all past environmental challenges at the Shazand Refinery have been resolved, and this industrial complex is moving along the path of sustainable development,” he said.

He described the increase in production capacity of key products as another achievement of the overhaul and added that the Shazand refinery is now operating at full capacity and fully meeting the country’s domestic needs. This, in addition to strengthening the refinery’s position at the national level, plays an important role in reducing the country’s dependence on imports of petroleum products.

Cheraghi described the resolution of environmental issues, the increase in production capacity, and the improvement in product quality as the three main achievements of the recent overhaul project, saying: “We have chosen the path of sustainable development and believe that the future of the country’s oil industry must be built on respect for the environment and the use of domestic capabilities.”

Sweet Gas Delivery Hits 882 mcm/d

The CEO of the National Iranian Gas Co. (NIGC) Saeed Tavakoli has said gas sweetening and delivery to national grid had been smashed.

“This figure, which stood at 880 mcm/d last calendar year, reached 882 mcm/d this calendar year over the same period,” he said.

He added that on 13 January, 162.1 mcm of gas was delivered to power plants, and with this performance, the record for gas deliveries to this sector was broken for the several consecutive time this year.

Tavakoli said from 21 March last year to 11 January this year, more than 3.2 bcf of additional gas had been delivered to power plants and at least 1.5 bcm of additional gas to industries.

“However, this does not mean that conditions have returned to normal. Rather, this achievement has been merely made possible through the efforts made by employees and proper consumption management, so we should not become complacent. The success achieved is the result of proper performance across all sectors of gas production, transmission, and distribution,” he said.

Referring to the 12-Day War and the resilience of the gas industry throughout it, Tavakoli stated: “During this period, some refinery facilities were damaged; however, thanks to the dedication, commitment, and scientific, coordinated management of gas industry personnel, one of the damaged units at the Fajr Jam Gas Refinery was rebuilt in less than six months and returned to the production cycle.”

Explaining the scope of the extensive operation to rebuild the damaged unit at the Fajr Jam Gas Refinery, he said: “In this project, colleagues succeeded in carrying out more than 9,000 inch-diameter welds. At the same time, 14,000 square meters of sandblasting, 4,000 square meters of insulation, and the erection of 31,000 cubic meters of scaffolding were completed under constrained conditions, such that the installation of 16,000 meters of signal and power cables was carried out continuously and simultaneously, without interruption.”

“Today, we proudly announce that the unit which was targeted by the enemy is now ready for production and, along with some gas refineries, may help increase the country’s gas output and breathe new life into one of Iran’s oldest gas refineries,” said Tavakoli.

South Pars sees 25 mcm in new daily gas capacity

The CEO of Pars Oil and Gas Company announced an additional daily gas extraction capacity of 25 million cubic meters in the South Pars field under the 14th administration, adding that with new wells coming online by year’s end, this capacity will increase to 30 million cubic meters.

According to Pars Oil and Gas Company, Touraj Dehqani detailed the company’s production activities during a Wednesday meeting with senior executives of South Pars oil, gas, and petrochemical companies and Zbihollah Khodaeian, head of the State Inspectorate Organization. He stated that by the end of this year, with the completion of new wells, the gas extraction capacity built in South Pars will exceed 30 million cubic meters per day.

Dehqani emphasized that Pars Oil and Gas Company is the nation’s largest development and production company with the greatest volume of investment in gas projects. He noted the efforts of its employees, particularly on the South Pars gas platforms, generate approximately $100 billion in annual revenue for the country. This value creation is unparalleled and, beyond financial gains and energy supply, has provided valuable experience to strengthen domestic manufacturing capabilities.

The CEO said the company’s focus over the past 15 months has been on bringing semi-finished wells into production. Despite financial constraints, this period saw the addition of a sustainable daily extraction capacity of about 25 million cubic meters. In comparison, the total increase over the prior three years was 11 million cubic meters, according to available statistics.

Dehqani also highlighted the upgrading of the drilling fleet in the South Pars field, noting the number of active drilling rigs has significantly increased from four to ten.

He stated the company’s responsibilities are not limited to South Pars projects, with other gas fields also slated for development. Among ongoing projects, construction of gas facilities for the Belal project is underway, with its jacket installed and drilling commenced.

Oil Prices and Supply Glut Nightmare

As 2025 ends, the global oil market stands at a point that could be considered one of the most sensitive periods over recent decades. Oil remains the world’s most important strategic commodity, but in addition to economic and geopolitical factors, it is now undergoing profound structural changes. The changes from the energy transition to emerging technologies, have transformed the behavior of both producers and consumers.

The year 2025 began while the global economy had still not fully recovered from the successive shocks of recent years, including periodic recessions, supply-chain crises, and sharp fluctuations in monetary policy. After the turbulence of 2022 and the rebound of oil prices to the $100 peak, the oil market is now facing a new reality: a supply that is growing faster than demand, and an outlook that requires more careful analysis than ever before.

Donald Trump’s return to power in 2025 became one of the key variables behind oil-market volatility. With the weapon of tariffs in hand, Trump threatened various countries, including China, Canada, Mexico, and even his strategic allies such as the European Union. This caused many forecasts regarding oil demand to be revised down. Alongside this, Trump’s pressure on OPEC to increase production and his explicit efforts to push oil prices lower widened the range of market fluctuations, leaving market participants facing a much more uncertain outlook.

One of the uncertainties in the market at the beginning of 2025 was the rapid growth of renewable energy and the forecasts suggesting that global oil demand might decline by around 2030. Data showing rising investment in solar, wind, and electric vehicles reinforced the belief that oil demand could slow down, or even begin to fall, earlier than expected. This concern encouraged some producers to increase supply, seeking to inject as much output into the market as possible before their market share was gradually overtaken by clean energy. This hidden competition to retain customers became one of the factors intensifying supply pressure in 2025.

The clearest evidence of this trend was the OPEC+ determination to reclaim its historic share of the global oil market, a determination that was evident in all of the alliance’s decisions throughout 2025. After several years of restrictive production policies, the alliance concluded that continuing output cuts might weaken its position against competitors such as the US shale oil. For this reason, from the beginning of 2025, a series of decisions were made to gradually increase production.

At the beginning of 2025, the group had in place a total supply reduction of 5.8 mb/d to support the market over recent years. This included two separate layers: 2.2 mb/d and 1.66 mb/d, applied voluntarily by eight members (Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman), along with a collective reduction of 2 mb/d by all member countries.

Alongside economic factors and supply-demand dynamics, the high level of geopolitical tension around the world in 2025 hung over the oil market like the Sword of Damocles. The Russia-Ukraine crisis and reciprocal attacks continued to have a significant impact on global oil prices, but the primary focus of concern shifted to the sensitive region of West Asia, where the Zionist regime’s attacks on countries in the region had entered a new phase. Naturally, any conflict or disruption to oil production and exports in this region could rapidly trigger sharp price volatility. These regional risks heavily influenced the market at various points, but overall they failed to exert a lasting long-term effect on oil prices.

Given the combination of these factors, 2025 naturally became a year marked by significant volatility in oil prices. Estimates from many reputable institutions indicated that the market that year had neither the capacity for a sustained jump above $90 nor the conditions for a structural collapse below $50. Accordingly, oil prices fluctuated between $60 and $82 during the year. This price range reflected both the oversupply and demand concerns, as well as the impact of geopolitical risks, production decisions, and shifting consumer behavior across different seasons. To gain a clearer understanding of market dynamics, we now intend to examine the year’s major price fluctuations and the causes behind each of them separately.

Short-Lived $80 Price Band

According to data published by Oil Price, each barrel of Brent crude oil from the North Sea was traded at $77.04 on the first day of January 2025, showing a 3% decrease compared to the same date the previous year. However, only 15 days into 2025, the Brent benchmark followed an upward trend and reached its price peak for the year, trading at $82.03. This is while the price of Brent oil on the same date the previous year (January 15, 2024) was around $78.

In addition to the tightening of oil sanctions against Russia, several other factors contributed to the price increase in the oil market during this period. The factors are cold weather in the Northern Hemisphere and the resulting rise in demand for heating fuels, a decline in the US crude oil inventories, optimism about potential economic stimulus measures from the Chinese government, and the continuation of OPEC+ production cuts. However, this upward trend did not last long, and a downward movement began soon after. Thus, although oil prices briefly returned to the $80 range for the first time in four months, they quickly slipped away from that level and continued moving within lower price bands.

Trump Sinusoidal Impact

The downward trend in oil prices continued uninterrupted during the second half of January 2025. Bearish signals, such as the US determination to increase fossil-fuel production, Trump’s criticism of OPEC for high oil prices, and fears over new tariffs, had drained momentum from the market. At this point, Trump’s contradictory and highly volatile statements regarding trade tariffs left the oil market in a state of uncertainty.

Although these same factors kept the market on a downward path in February, the $70 range was nonetheless preserved.

However, in early March, as prices continued to decline, oil neared the loss of the $70 threshold on two occasions, but several supportive factors prevented this from happening. Washington’s sanctions against Venezuela and Iran, along with a weakened US dollar, helped prices recover to $75 by the end of the month.

Oil Market Decline

But from the beginning of February, the oil market situation changed. The trade war between the world’s two largest economies intensified with the start of the US tariff impositions and China’s subsequent retaliatory measures. At the same time, eight OPEC+ members decided to begin implementing the plan for gradually adjusting the reduction of oil supply of 2.2 mb/d (a phased increase in production) by 138,000 b/d starting in April. This decision was made even though the implementation of this plan had already faced several delays due to conditions in the global oil markets.”

These developments caused oil prices to plunge to around $62 — price levels unprecedented in the oil market since 2021. The downward slope was so steep that some media outlets, referring to the trend of oil prices in the early days of 2025, wrote: “One-fifth of the oil market was swallowed.”

Although hopes for trade negotiations between the US and other countries, especially China, prevented oil prices from falling further at that point and pushed prices back up to $66, this trend did not last either. This time, in early May, in reaction to OPEC+ announcing the implementation of the second phase of the supply-cut adjustment plan (a production increase of 411,000 b/d), oil prices were on the verge of losing the $60 channel. OPEC+, however, did not back down and believed market conditions were favorable for adopting a similar decision for the next two months, as well.

Subsequently, oil prices experienced a slight increase as optimism strengthened regarding the resolution of trade disputes between the world’s two largest crude-oil consumers, and by early June they were fluctuating within the $60 to $66 range. But it seems that this calm before the storm did not last long either.

OPEC and Iran Impact on Oil Prices

Vahid Ziaei-Bitaraf

On June 13 last year, news of nighttime explosions in Tehran and the Zionist regime’s aggressive actions against Iran had a strong impact on the oil market. In reaction to these reports, oil prices rose by about 12%, reaching $74. As the clashes expanded and the US became directly involved in the confrontation, one of Iran’s traditional options for changing the dynamics once again returned to the table, and speculation about the possibility of Iran blocking the Strait of Hormuz increased. This strait, described as the world’s energy lifeline, is the transit route for 20% of global oil consumption.

At this point, some analysts warned that if the Strait of Hormuz were to be closed, oil prices could rise to $200-$300, and traders were closely monitoring every aspect of the conflict with heightened sensitivity. However, ultimately, after oil prices had surpassed $77, the 12-day war ended with mediation by Qatar and the US, and both sides halted their attacks. With the end of the 12-day conflict, relative calm quickly returned to the oil market, and by the end of June trades were once again taking place around the $66 band.

OPEC+ Comeback Bid

Another important development in early July was the implementation of the fifth phase of the supply-cut adjustment plan by eight OPEC+ members, which this time proceeded at a steeper pace and was set to add 548,000 b/d to the oil market starting in August. Nevertheless, supported at this stage by improved seasonal demand, the oil market, despite certain realities such as declining inventory levels, did not experience significant price declines, and trades continued in the $66 to $70 range.

At the end of July, following a US-Europe trade agreement to reduce tariffs and signs of an extension of the US-China trade truce, the demand outlook strengthened, pushing oil prices higher to around $72 per barrel. However, this upward wave was quickly neutralized by the US administration’s new round of trade tariffs on the global economy, and the oil market once again found itself in the mid-$60 range.

Meanwhile, as expected, the eight OPEC+ members decided to send another 548,000 b/d to the market starting in September, thereby fully ending the first layer of their voluntary supply cuts. They even granted the UAE permission to raise production by an additional 300,000 barrels under the new framework. In this way, over the span of six months, the group added about 5.2 million barrels to the oil market’s supply and then proceeded to the second layer of their gradual voluntary supply-reduction phase-out, a development that occurred amid repeated analyst warnings about the possible emergence of an oversupply in the market.

Moving forward, news about the Alaska summit and the meeting between President Trump and President Vladimir Putin regarding Russia-Ukraine peace talks also had a temporary impact on the market’s downward trend.

In August, the oil market showed fewer changes compared to previous months and fluctuated within the $66 to $69 range. During this period, the ‘rising tensions between Russia and Ukraine and the mutual attacks on each other’s energy infrastructure’ acted as the main supportive factor, while on the other hand, in addition to ‘OPEC+ decisions,’ the ‘intensifying concerns about a trade war between the United States and other countries’ served as downward-pressuring factors in the oil market.

Oversupply Fears

As the oil market closely monitored OPEC+ decision-making, it had already prepared itself for an increase in production and the lifting of the group’s second layer of supply cuts. This expectation caused oil prices to fall in early September, bringing prices back down to $65. The eight members of the group decided this time to unwind 137,000 b/d from the second layer of their voluntary cuts (which totaled 1.65 mb/d) starting in October. Although this decision still meant an increase in supply, it was implemented at a slower pace, reflecting greater caution among OPEC+ members and offsetting part of the price decline.

On the other hand, the intensification of oil sanctions against Russia raised concerns in the oil market about the continued supply from the world’s third-largest producer. At the same time, Ukraine’s drone attacks on Russia’s refining infrastructure increased and had become troublesome; during this period, the Zionist regime’s attack on Qatar further fueled worries about geopolitical developments. All these events caused the oil market to approach a return to the $70 band in late September.

However, later on, ‘the OPEC+ decision to lift 137,000 barrels of voluntary supply cuts starting in November’, and more importantly, ‘the escalation of trade tensions between the United States and China’ as well as ‘the release of concerning reports regarding demand conditions from the US and Asia’, led oil prices to fall to $64 per barrel.

The market’s downward trend continued as geopolitical tensions in West Asia eased following the announcement of a ceasefire in Gaza and the most serious peace negotiations between Russia and Ukraine. It appeared that, given the fear created by the emerging oversupply, oil prices would not remain in the $60 range for long. However, this trend did not last. Following a new round of the US sanctions against Moscow and India’s reassessment of its purchases of

Russian oil, price movements reversed and returned to the mid-$60 range.

OPEC+ Backs Down

In late October and early November, oil prices fluctuated between $63 and $65 when OPEC+ once again surprised market participants with its decision. The eight OPEC+ members announced that in December they would unwind another 137,000 b/d, an amount similar to that of October and November, from their voluntary supply cut of 1.65 mb/d. In their statement, these members noted that due to the seasonal nature of demand, the unwinding of voluntary supply cuts would be paused in January, February, and March of 2026.

Analysts and commentators viewed this announcement as an implicit acknowledgement of a supply surplus. Shortly thereafter, the OPEC itself, in its new assessment of the 2026 supply and demand outlook published in its November Monthly Report, confirmed, contrary to its previously optimistic stance, the possibility of a supply surplus that year. This development pushed prices down to $63.

As oil continued its trajectory in November, it was influenced mainly by the Russia-Ukraine peace negotiations and the intensified reciprocal attacks between the two sides, which this time were pursued more seriously than before. During this period, seasonal support for oil prices and the ongoing U.S. military threats against the world’s largest holder of crude oil reserves (Venezuela) prevented prices from falling out of the $60 range. Oil prices fluctuated between $62 and $65 during this time.

Oil Prices in 2026

However, according to the analysts’ forecasts, what fate awaits the oil market in 2026? Will the downward trend in prices continue, or should we expect new surprises?

In this regard, the US bank Goldman Sachs has announced that, following the increase in oil oversupply next year, the price of Brent crude may fall to $50 per barrel by the end of 2026. Analysts at the bank expect oil oversupply to average 1.8 mb/d from the fourth quarter of 2025 to the 4Q2026, which would lead to an increase of around 800 million barrels in global inventories by the end of 2026.

Although the International Energy Agency (IEA), in a clear shift from its earlier pessimistic analyses, has recently confirmed the long-term role of oil and gas in the future of global energy, the agency has nonetheless raised worrying points regarding a supply surplus in the oil market in 2026.

According to this report, the IEA predicts that global oil and gas demand will continue to rise through 2050, effectively retreating from its previous stance on a rapid transition to cleaner fuels. However, the agency still emphasizes that the gap between supply and demand will widen in 2026. According to the report, the global oil market next year will face a daily oversupply of 4.09 million barrels due to increased production by OPEC+ and other competitors, combined with slower demand growth. This figure, equivalent to about 4 percent of global demand, is significantly higher than other analysts’ estimates.

Meanwhile, according to the OPEC’s latest forecast, global oil supply in 2026 will exceed demand by about 20,000 barrels, whereas in previous forecasts OPEC insisted on a supply deficit. This revision was highly significant for market participants and traders, as it signals to investors that even if OPEC continues to increase production, earlier concerns about short-term oil shortages have eased and a supply surplus is now likely.

The US Energy Information Administration (EIA), in its Short-Term Energy Outlook published on September 9, also predicted that Brent crude prices will fall to around $50 per barrel in early 2026. The Russian Ministry of Finance likewise forecast that Brent oil prices will remain in the $60 to $70 range in 2026, but warned that in the event of rising inventories, there is a short-term risk of prices dropping to $50.

On this basis, the oil market, assuming geopolitical conditions remain stable (even without a Russia-Ukraine peace agreement), faces an unstable outlook. Nevertheless, OPEC+ and its competitors are still seeking to capture a larger share of the market, and it seems unlikely that demand trends will ease the supply-side appetite of oil producers. Therefore, a continued downward trend in the oil market in 2026 is not far-fetched, although unexpected developments could always reverse the trajectory.

2025 Energy Market led by Wind and Solar

Elahe Baqeri Sanjarie

Part I

The International Energy Agency (IEA) had forecast solar energy would meet nearly half of the growth in global electricity demand by the end of 2025, while global energy-sector investment would reach an unprecedented record of $3.3 trillion. The share of renewables, nuclear energy, grid expansion, storage, low-emission fuels, energy efficiency, and electrification would amount to about twice the $1.1 trillion invested in oil, gas, and coal.

Fossil Fuels History

It was about 286 to 360 million years ago, before the age of the dinosaurs, when the period known as the Carboniferous era marked the beginning of the formation of fossil fuels. At that time, the landmasses of Earth were covered with vast swamps filled with enormous trees, and the seas and shorelines were blanketed with algae.

Over the years, the trees and plants died and sank deep into the marshes. The plants were buried and, together with the remains of the trees, formed a spongy substance called peat. For hundreds of years, sand, clay, and other minerals, forming sedimentary rock, covered the peat. These sedimentary layers accumulated, gradually compressed, and after millions of years transformed into coal.

Oil followed a similar path; as a fossil fuel, it formed more than three hundred million years ago. Much later, as the Earth’s crust shifted, moved, and folded; the reservoirs that trapped oil and natural gas were formed.

Over the years, humans gradually discovered ways to make use of these fuels—methods that are described in detail in the history of oil and gas discovery and extraction. Day by day, new techniques were developed to increase the utilization of fossil fuels, and new products were added to refinery outputs.

Eventually, according to statistics published in 2024, fossil fuels came to account for 81% of the world’s energy mix, with China, the United States, and India; respectively ranked as the three largest consumers of these fuels.

Under these conditions, and with the excessive consumption of fossil fuels, humans and their habitat, the Earth, faced numerous challenges. Extreme global warming, climate change and its consequences, including recurring droughts, and the rapid increase in pollutants, are among these problems.

Renewables’ Ambitions

In the wake of the 1973 oil shock, when OPEC members (at the request of the Arab member states) announced an embargo on oil sales in October 1973, causing a sharp rise in oil prices, the major industrialized countries adopted various policies to strengthen their energy security, including increasing the production of energy sources that could substitute for fossil fuels.

From that point onward, renewable energies gained an important position in the energy-policy frameworks of the industrialized countries. Each year, a significant share of their national energy needs is supplied through wind turbines, solar cells, geothermal power, and similar technologies.

In other words, over recent years, as the problems caused by fossil fuels have intensified. Many countries, particularly those committed to agreements such as the Paris Accord and those engaged in developing renewable energy, have expanded their investments in the renewable-energy sector.

In this regard, the global renewable energy market has witnessed an increase in capacity, particularly in solar and wind power. Countries in Europe, Asia, and North America have intensified their efforts to move away from fossil fuels and to set ambitious goals for expanding clean-energy capacity in the future. This growth accelerated significantly in recent years, especially in 2023, 2024, and 2025.

At the outset of 2025, the IEA announced that solar power would meet nearly half of the growth in global electricity demand by 2025. The agency also predicted that global investment in the energy sector would reach an unprecedented record of $3.3 trillion, with renewable energy, nuclear power, grid expansion, storage, low-emission fuels, energy efficiency, and electrification accounting for the majority, an amount that is twice the $1.1 trillion invested in the oil, gas, and coal sectors.

No End in Sight for Fossil Fuels

This forecast of investment growth comes at a time when the United States is considered one of the largest consumers of fossil fuels. Meanwhile, President Donald Trump, the main opponent of clean energy, has returned to the White House, heightening the concerns of environmental activists. During his first term, he repeatedly referred to wind projects as “useless and ugly,” and described solar energy as an “expensive and unreliable” source. Now he once again has the opportunity to rewrite the US energy policy and change the country’s future energy trajectory.

Indeed, he has used this opportunity in line with his own approach, and in late September 2025 announced that he would cancel more than $7.6 billion in clean-energy project funding across 16 US states, projects that included hundreds of initiatives in battery development, hydrogen, grid improvements, and carbon-capture technologies.

This move aligns with the broader policy of the Trump administration to roll back the climate initiatives of the Biden administration. One week before the Trump’s decision, the Department of Energy cancelled $13 billion in clean-energy funding approved under the 2022 climate law, while the White House simultaneously proposed reducing or eliminating strict regulations on GHG emissions and vehicle standards.

Despite these obstructions from Trump, a report by the climate think tank Ember shows that in the first half of 2025, countries around the world produced nearly one-third more solar energy compared to the same period in 2024, meeting 83% of the growth in global electricity demand. Wind energy grew by slightly more than seven percent, allowing renewable energy sources to surpass fossil fuels for the first time. According to the report, China and India have been largely responsible for the increase in renewable energy, while the US and Europe have remained more dependent on fossil fuels.

Fresh Challenges

Despite 2025 being an important turning point for global energy developments, and despite renewable sources being on track to become the world’s primary source of electricity, there are still worrying signs regarding electricity security. Investment in power grids has not been able to keep pace with rising generation and transmission costs. Maintaining electricity security requires enhanced investment in grids so that by the early 2030s, it can match the costs of electricity generation.

While intense competition has helped lower the prices of solar panels and batteries, the cost of electrical equipment is rising. Shortages of transformers and cables, along with higher steel and aluminum prices, especially in the US, have driven up the costs of excavation and large engineering projects. This trend may worsen with the introduction of new trade tariffs.

At the global level, however, there is a significant imbalance in energy-sector investment. While China accounts for more than one-third of global clean-energy investment and has become one of the leaders in this transition, many developing economies, especially those outside China, face numerous obstacles in attracting financing. High repayment rates and political risks have undermined the confidence of international investors, leaving several important clean-energy infrastructure projects incomplete. Meanwhile, international development finance institutions have made little effort to fill this gap.

In other words, countries like China, by focusing on domestic development and the export of green technologies, are solidifying their position as future leaders of the global energy market, while developing countries continue to fall behind in this competition. At the same time, the slow expansion of electricity-transmission infrastructure, especially in countries with rapidly growing demand, has become a serious challenge that could soon lead to widespread blackouts or reduced grid stability. To prevent such a crisis, investment in electricity transmission and distribution networks must be increased to a level comparable with that of power generation.

From a climate perspective as well, the gap between the investments made so far and the targets set by the Paris Agreement or the resolutions of COP30 is clearly evident. Achieving the goals outlined in these agreements requires at least a doubling of investment in clean-energy production by 2030. It is also essential that investment in infrastructure such as power grids and battery systems grow significantly over the next four years.

Oil Prices Forecast 2026

Ehsan Jenabi

Senior Energy Analyst

Introduction

Forecasting oil prices for 2026 involves steering a complex and often-volatile landscape shaped by variety of major factors and issues: market fundamentals, geopolitics forces, world economic growth rate, COP approvals and energy transition policies. However, nowadays fundamentals play a less prominent role, compared with other factors such as geopolitics. When it comes to prices forecasts for 2026, many market analysts are of the opinion that the market is in a period of structural transition, leading to a forecast characterized by moderate prices but high uncertainty.

Key Benchmarks

For 2026, analyst projections for the OPEC Reference Basket (ORB) generally fall within a range of $70 to $85 per barrel, with a median consensus clustering around $78-$82.

Most long-term forecasts for Brent Crude in 2026 cluster in a range of $75 to $90 per barrel. This represents a “managed” range, balancing OPEC+ supply constraints against slowing demand growth.

Across 2026, forecasts for WTI oil prices range from approximately $49 to $57 per barrel, while average breakeven costs for drilling new wells in the U.S. range from $61 to $70 per barrel.

Primary Factors Shaping 2026 Forecast

1. Demand Dynamics: The Peak Debate

• Slowing Growth: Global oil demand growth is expected to decelerate significantly by 2026. The post-Covid-19 rebound will be long over, and the effects of efficiency gains, electrification of transport (especially EVs), renewables share in the energy mix and policy mandates for biofuels will be more tangible.
• “Peak Demand” vs. “Plateau”: 2026 sits at the heart of the debate. The International Energy Agency (IEA) has projected a potential peak in fossil fuel demand before 2030. However, other analysts e.g. OPEC see demand continuing to grow through the decade. The key question for 2026 is whether demand will have peaked or merely be plateauing at a high level, heavily influenced by economic growth in China, India and emerging Asia.

2. Supply-Side Capacity

• OPEC+ Management: The alliance’s ability and willingness to adjust production to defend a price floor will remain the most critical short-term price driver. Their spare capacity levels and cohesion will be a major focus.
• Non-OPEC Supply: The United States (Permian Basin), Guyana, Brazil, and Canada are expected to play their role as supply growth driver. The price sensitivity (“responsiveness”) of U.S. shale to higher prices, as well as its CAPEX and OPEX will be key variables.
• Underinvestment: As the experiences indicate, years of lower investment in large-scale, lack of interest on the part of investors and money managers to invest in oil projects, policies for GHG mitigation leading to lower investment, long-cycle conventional projects could begin to translate into tighter supply by the latter half of the decade, providing a potential price floor.

3. Geopolitics and “Risk Premium”

The market will remain acutely sensitive to conflicts, political tensions and sanctions imposed on major oil producers that threaten physical supply flows (e.g., tensions in the Middle East, Russia- Ukraine war, and Iran /Venezuela sanctions policy). This may inject sudden and sharp volatility and uncertainty, creating price spikes even within a softer fundamental trend.

4. Macroeconomic Environment

Global GDP growth, inflation, and central bank interest rate policies directly affect industrial activity and primary energy consumption. A recession would crush demand, while a “soft landing” or stronger growth would support it.

5. The Energy Transition Accelerant

Policy momentum from climate agreements, technological breakthroughs in renewables/batteries, and corporate decarbonization goals will continue to cast a long shadow, potentially dampening long-term investor appetite for oil projects and influencing demand expectations.

Key Scenarios for 2026

• Base Case (Moderate Prices, ~$80-$85/b): A balanced market where OPEC+ manages supply to offset non-OPEC growth, demand grows slowly, and the energy transition proceeds steadily without major shocks.
• Bull Case (>$90/b): Driven by a combination of stronger-than-expected demand (especially from Asia), significant supply disruptions (geopolitical or accelerated decline rates), and clear evidence that underinvestment is causing a structural supply shortfall.
• Bear Case (<$75/b): Triggered by a deep global economic slowdown, a fragmentation or quota non-conformity within OPEC+ leading to a production war, or an accelerated pace of energy transition that materially erodes demand projections.

Conclusion

In summary, the forecast for 2026 is not for a return to the super-high prices of the 2008 or 2022 peaks, nor a collapse. Rather than that, it points to a market caught between:

• Cyclical forces (OPEC+ management, economic cycles) and
• Secular forces (the energy transition, peak demand concerns).

This creates a likely trading range with a ceiling (set by technology substitution and demand destruction) and a floor (set by OPEC+ resolve and the cost of new supply). The greatest risks are not to the central forecast, but to its volatility, with potential for sharp, short-term moves based on geopolitics or unexpected economic data.

Petchem Output Capacity to Hit 131 mt by 2028

Iran’s petrochemical industry is one of the most economically profitable and high-yield sectors. The high value added in this field, along with Iran’s comparative advantages in hydrocarbon resources and access to high seas, has enabled economic planners to consistently assign it an important role in development programs. According to the 7^th Five-Year Economic Development Plan, 66 strategic petrochemical projects have been targeted in order to enhance the petrochemical industry’s nominal capacity by 35 million tonnes (mt).

This will mean a leap in production capacity from the current 96.6 mt to 131.5 mt by March 2029. This remarkable growth not only reflects the strong planning and execution capabilities within the industry, but also significantly enhances Iran’s position in global petrochemical dynamics.

Another important point is that the country’s nominal capacity will surpass the 100-mt mark by next March, which is considered a promising and acceptable achievement on the path toward sustainable development. In parallel with this expansion of production capacity, the overarching objective of National Petrochemical Company (NPC) is to ensure attraction of investment in the industry. This goal is being pursued while the petrochemical sector is grappling with numerous structural and external challenges, inter alia international sanctions, which complicate access to financial markets and technology, as well as feedstock shortages and currency fluctuations, which cast doubt on the economic viability of projects. Nevertheless, the emphasis on formulating appropriate and effective strategies for investment attraction in these strategic projects reflects the 14^th administration’s determination to overcome these obstacles and to leverage domestic capacities to meet the quantitative targets that have been set.

Petchem Features

Iran’s petrochemical industry, as a driving engine of the national economy and a key player in international markets, plays an important role in wealth creation and foreign currency generation. This complex industry, international in nature and dependent on advanced technologies, accounts for the highest value-added rate among the country’s manufacturing sectors.

According to the official statistics, the petrochemical industry currently accounts for 25% of total non-oil exports and about 19% of the country’s industrial value added. These figures clearly highlight the vital importance of the industry in ensuring the resilience of the national economy, especially under sanctions, and they outline the future development prospects of the country. One of the distinctive strengths of this industry is the creation of value added in downstream sectors. In fact, maximum value added is generated at the first stage of processing in the downstream and midstream segments of the petrochemical sector.

In addition, the petrochemical industry, serving as the connecting link between the upstream sector and a wide range of downstream industries, is a primary driver of entrepreneurship and job creation. Hamidreza Ajami, director of investment at NPC, said: “This industry is capable of growing under difficult conditions and meeting the needs of the country.” For this reason, the petrochemical sector is regarded as one of the main pillars of economic, cultural, industrial, and social development.

Investment Attractions

Iran’s petrochemical industry, as a leading and rapidly developing sector in the region, offers extensive capabilities and strong appeal for both domestic and foreign investors. Among the most significant of these advantages are skilled and cost-effective workforce, broad network of research and knowledge-based institutions, access to international open waters, attractive domestic consumer market, and proximity to 15 neighboring countries, each of which represents an additional incentive for investment in the petrochemical sector.

In the meantime, investment in the petrochemical industry must be accompanied by guarantees for the preservation of principal capital and its returns; i.e. every investor must be able to withdraw its principal and profit whenever they choose, while feeling fully secure when committing to an investment. For this purpose, Foreign Investment Promotion and Protection Act (FIPPA) has been adopted. The Act provides various facilities for investors. Chief among these facilities are: equal commercial treatment with domestic investors, no restrictions on the share of foreign partners, the granting of protective guarantees to foreign investors, simplified issuance of residence visas for foreign employees and their families, the facilitation and removal of administrative barriers, and the granting of customs exemptions in free trade and special economic zones, along with numerous other incentives,.

Domestic and Foreign Investment

One of the primary approaches of NPC is to attract foreign investment, as relying solely on domestic investment allows for only limited growth and undermines the industry’s competitive strength in the global market.

Accordingly, in an effective step, NPC signed a memorandum of understanding with the Organization for Investment Economic and Technical Assistance of Iran (OIETAI). Under the MoU, it was agreed that Iran’s petrochemical industry, being a foundational and fast-growing sector with guaranteed returns on investment, would be prioritized in international forums aimed at presenting investment opportunities. In addition, efforts have been made to secure an appropriate share of foreign investment for this sector through participation in platforms such as BRICS and the Shanghai Cooperation Organization (SCO).

In line with these measures, several successful partnership experiences have taken shape in the petrochemical industry. Among them are Arya Sasol Polymer Company, Karun Petrochemical Company, and Mehr Petrochemical Company inside the country, as well as NPC Alliance Petrochemical Corporation (known as Philippines Petrochemical) abroad.

These partnerships, due to the diverse, international, high-technology, modern, and innovative nature of the petrochemical sector, serve as guarantees for business security and continuity.

Hassan Abbaszadeh, the CEO of NPC, touching on investment attraction, said: “The 7^th Plan Act stipulates that 40% of companies’ annual profits shall not be distributed, but instead reinvested within the same developmental value chains. Strict implementation of this single clause may pave the way for attracting substantial investment into the industry.”

Noting that the 66 projects envisaged in the 7^th Plan would require about $26 billion in investment, he said: “These projects did not begin with the Seventh Development Plan; rather, they already have an average physical progress of about 60%. So far, roughly $13 billion has been invested in these projects, and during the first two years of the plan, satisfactory progress has been made.”

On the petrochemical outlook, he said: “In the 10-year outlook, 46 petrochemical projects are ready for investment. These projects are at the initial stages and are scheduled to come onstream under the 8^th Development Plan. They require a total of $44 billion in investment, and all of them already have environmental permits, land-use approvals, and civil defense compliance, and even the project operators are in place. In addition, a specific plan has been prepared for each project to present it to potential investors.”

For his part, Ajami gave an upbeat assessment of offering incentives to regional partners and companies. He said: “Despite political and sanction-related constraints, commercial and financial interactions with regional and Asian companies and investors remain possible. These interactions require competitive investment packages, legal guarantees, and informational transparency. Models must be designed that can convince both foreign and domestic investors to enter projects through structures such as partner-investor arrangements, guaranteed-return agreements, or revenue-sharing mechanisms.”

He highlighted the significance of timeframe set for projects, saying: “Many petrochemical projects come onstream within a period of one to four years, and this characteristic could be presented as an economic advantage for attracting capital market investment. Moreover, with proper risk management and the provision of transparent financial packages, petrochemical projects can become attractive options for both small and institutional investors.”                                                                   

Prioritized Projects

Efforts to attract investment in the petrochemical industry are being pursued while 19 projects from the 7^th Plan have been defined for the current calendar year in this sector. Four of these 19 projects are feedstock-supply projects, involving $2.4 billion in investment to produce 2.8 mt of C2+ based on the annual nominal feedstock capacity. These projects include NGL 3100, Phase 2 of NGL 3200 in West Karoun, Phase 1 of the Bidboland flare-gas recovery project in the Rag-e Sefid area, and the flare-gas capture and upgrading project in the Ahvaz area in East Karoun. Among these, NGL 3100 has recently been officially commissioned.

Moreover, 15 petrochemical production projects with a combined capacity of 6.8 mt of products will also be launched within the petrochemical value chain in the current calendar year. Together with the C2+ produced through flare-gas collection, approximately 10 mt will be added to national petrochemical production capacity. A key feature of these projects is that they lie within the midstream production chain and the value-added chain of the petrochemical industry. Among them, only one project, Apadana Methanol, is based on natural-gas feedstock.

In total, 144 projects have so far been registered in the investment licensing and renewal system, with a combined investment volume of around $100 billion. Among these, 20 projects, with a total investment of $11 billion and a production capacity of 15.5 mt, have achieved over 70% physical progress. Another 32 projects, requiring a total of $22 billion in investment and offering about 29 mt of production capacity, are between 20% and 70% complete. The remaining 92 projects, with approximately $67 billion of total investment and around 86 mt of production capacity, have less than 20% physical progress.

Conclusion

Iran’s petrochemical industry, as one of the most important pillars of national economy, plays a central role in industrial development, value creation, non-oil exports, and job generation. With extensive infrastructure at its disposal, the industry holds a significant position in the global value chain. Despite political and economic challenges and the restrictions imposed by sanctions, it remains one of the most attractive options for both foreign and domestic investors in the region. This is because, in addition to its focus on completing value chains, the industry aims to transform itself from a producer of basic feedstocks into a supplier of more complex, higher value-added products. This shift strengthens the outlook for long-term profitability and continues to draw the attention of investors toward Iran’s petrochemical sector.

Technologies, Projects, and Strategic Implications

By Reza Abesh Ahmadlou

Materials and Energy Expert

(Part I)

As natural gas reservoirs mature, declining reservoir pressure becomes one of the most critical constraints on sustained production. Gas compression (pressure boosting) has therefore evolved from a supplementary option into a core upstream strategy for maintaining flow rates, preserving plateau production, and extending the economic life of gas fields. A clean and integrated review will be helpful on major upstream gas compression projects worldwide, with particular emphasis on offshore and subsea applications. Recent advances in compression technology include high-efficiency centrifugal compressors, modular compression packages, electrification, digital monitoring, and subsea wet-gas systems. Building on global experience, researches are needed to evaluate the technical, operational, and economic implications of applying gas compression in Iran’s major gas fields—most notably South Pars, Kish, and Kangan–Nar—where declining pressure, sour gas composition, and high condensate yields pose unique challenges. The analysis demonstrates that modern gas compression, when properly adapted to local reservoir and fluid conditions, can significantly enhance recovery, stabilize supply, and safeguard long-term energy security.

Reservoir Pressure, Basic Factor

Natural gas production is fundamentally driven by reservoir pressure. In the early life of a field, high natural pressure enables gas to flow freely from the reservoir through the wellbore and into gathering and transmission systems. Over time, however, reservoir depletion leads to pressure decline, resulting in reduced flow rates, lower deliverability, and in some cases premature abandonment of otherwise resource-rich fields. This challenge is particularly acute in giant gas fields that have supported national energy systems for decades and are now approaching mid- or late-life stages.

Gas compression—often referred to as pressure boosting—has emerged as one of the most effective solutions to counteract declining reservoir pressure. By increasing the pressure at the wellhead, manifold, or pipeline inlet, compressors restore the driving force required to move gas through the production system. In doing so, gas compression enables higher production rates, stabilizes export capacity, and extends the operational life of surface facilities and downstream infrastructure.

Globally, the strategic role of gas compression has expanded significantly over the past two decades. Advances in turbomachinery, materials science, power systems, and digital control have transformed compressors from bulky, fuel-intensive units into highly efficient, reliable, and adaptable systems. Offshore and subsea compression, once considered technically risky, are now proven technologies that have unlocked billions of cubic meters of additional gas from mature fields.

Reviewing major global upstream gas compression projects and emerging technologies, assesses their performance and challenges, and explores their applicability to Iran’s upstream gas sector. Given Iran’s vast gas reserves and the growing pressure decline in its flagship fields, gas compression is poised to become a defining element of the country’s future production strategy.

Global Upstream Gas Compression Projects

Around the world, oil and gas operators have turned to large-scale gas compression projects to sustain output from aging reservoirs. These projects span onshore, offshore, and subsea environments and reflect a broad range of geological and operational conditions.

In the Caspian region, major offshore developments have incorporated compression as a central component of field life extension. New offshore platforms equipped with high-capacity compressors are being installed to compensate for pressure depletion and maintain export commitments. These facilities are often designed for unmanned or minimally manned operation, relying on advanced automation and remote monitoring to reduce operation costs.

In the Middle East, large onshore compression programs have been deployed in supergiant fields where reservoir pressure has steadily declined after decades of production. Massive compressor stations, often consisting of multiple parallel trains, have been installed to boost gas for domestic power generation, industrial use, and reinjection. In addition to sustaining production, these projects support broader energy transition goals by enabling fuel switching from liquid fuels to natural gas, thereby reducing carbon emissions.

North Sea, Global Pioneer

The North Sea has been a global pioneer in subsea gas compression. Faced with harsh weather, deep waters, and long tie-back distances, operators have increasingly placed compressors directly on the seabed, close to the wellheads. These subsea systems eliminate the need for new platforms, reduce topside weight, and significantly improve recovery from low-pressure reservoirs. Long-term operational data from these projects demonstrate high availability, strong reliability, and substantial incremental recovery.

Elsewhere, similar initiatives are underway in Africa, Australia, and Central Asia. Onshore fields in desert environments rely on modular compression stations that can be rapidly installed and expanded as pressure declines. Offshore developments in remote regions increasingly favor electrified compression systems powered from shore, reducing gas consumption and simplifying maintenance.

Collectively, these projects highlight a clear global trend: gas compression is no longer a late-life add-on but a planned, integral component of upstream development strategies.

Fracking, Oil and Gas Output Booster

Enhancing oil and gas production in Iran depends less on developing new fields and more on the intelligent operation of existing reservoirs that today face natural declines in flow rate, rising complexity, and the necessity of preserving remaining resources. Under these conditions, the overarching policies of the oil industry—focused on improving recovery factors and the targeted use of modern technologies—seek to redefine the path toward production growth.

With this approach, the conference on “IOR/EOR in Oil and Gas Fields” was held on 28 December 2025, at the Research Institute of Petroleum Industry (RIPI). The event examined hydraulic fracturing not merely as a technical operation but as one of the strategic drivers of sustainable production in Iran’s oil industry, exploring its technical, economic, and technological dimensions in relation to the future of the country’s fields.

Reservoir Stimulation Technologies

Mohammad Ali Emadi, head of the Iranian Petroleum Engineering Association (IPEA), presented a framework for this priority-driven perspective by introducing the “20-80 rule.” He said: “According to the 20-80 rule, we must focus on the 20% of activities that generate 80% of the value added in production, productivity, and the development of the oil industry.”

Emadi went on to point out the rapid changes taking place in the “energy world,” noting that major international players have moved beyond an exclusive focus on oil and gas and are shifting toward renewable energy, digital technologies, and new business models. From his perspective, ignoring this trajectory domestically could prove costly.

He said “change is not a choice, but a requirement for survival,” and the pressure of technological transformations, the emergence of artificial intelligence, and environmental conditions are pushing the oil and gas industry to rethink its structures and approaches.

In line with this approach, digital technologies, AI, big data analytics, and digitalization were introduced at the conference as tools capable of improving the efficiency of exploration and production operations in the short term—from increasing drilling efficiency and shortening project timelines to reviving low-productivity wells and enhancing reservoir performance. Among the technologies discussed, however, multistage hydraulic fracturing and reservoir stimulation methods occupied a special place.

According to Emadi, due to their rapid implementation, lower upfront capital requirements, and quick returns, these technologies have the potential to become “quick wins” for boosting production. Within this framework, one of the main focuses of the event was a review of global experiences and an assessment of the feasibility of localizing and properly implementing hydraulic fracturing operations in Iran’s fields. Given reservoir differences, operational constraints, and safety requirements, this is not something that can be achieved merely by translating a foreign experience; it requires careful design and deeply embedded technical knowledge within the industry.

Fracking in Iran

Although hydraulic fracturing is sometimes presented in the general discourse of Iran’s oil industry as a “new” technology, a review of global experience shows that it has a history spanning nearly a century. The earliest studies related to fracturing date back to the 1930s, and the first fracturing operation was carried out in 1947. Since then, more than 1.8 million hydraulic fracturing operations have been performed worldwide, and a significant share of the growth in global oil and gas production—particularly in the US—has been the result of the development and application of this technology.

In Iran as well, hydraulic fracturing has been considered as one of the reservoir stimulation methods, grounded in geological understanding, reservoir behavior, and engineering design, and valuable experience has been accumulated in this field. What is emphasized in the current approach is leveraging these experiences through precise designs, appropriate reservoir selection, and adapting execution methods to the specific conditions of the country’s fields—an approach that enables more effective utilization of reservoirs’ production potential.

Mohammad Hossein Ghazal, director of technical affairs at the National Iranian South Oil Co. (NISOC), referring to the role of Bangestan reservoirs in the future of the country’s production, emphasized the importance of using modern reservoir stimulation methods. According to him, a significant portion of Iran’s potential for increased oil production is embedded in these reservoirs, and hydraulic fracturing may play an effective role in activating this capacity.

From this perspective, hydraulic fracturing in Iran’s oil industry is recognized not as a temporary or stopgap solution, but as part of an engineered approach grounded in global experience and indigenous expertise—an approach that, by focusing on proper design and targeted execution, can establish its place within the portfolio of production-enhancement technologies.

Transition from Pilot

At a time when a large share of the country’s oil production rests on mature and aging fields, the targeted use of reservoir stimulation technologies as a means of boosting production has gained increased attention. In this context, NISOC, as the country’s main oil-producing entity, plays a pivotal role in implementing this approach—a company responsible for around 75% of Iran’s oil production and 12% of its gas production.

According to the announced plans, hydraulic fracturing operations have now moved beyond the stage of limited, isolated actions and are progressing toward targeted, field-scale implementation. At the conference, Ghazal reported plans for the execution of 46 new hydraulic fracturing operations—projects that are currently in the tendering and contractor selection stages and are expected to be carried out over the next one to two years. According to him, these operations are designed to enable more effective recovery of remaining oil and to enhance production efficiency.

The prevailing view at this stage is to employ hydraulic fracturing as a tool with reliable returns and a shorter timeline for enhancing production—an approach that enables optimal utilization of reservoir capacity and can play a complementary role alongside other development methods in achieving production targets. At the same time, the implementation of these operations provides an opportunity to consolidate operational experience, enhance technical expertise, and develop indigenous models tailored to the characteristics of the country’s reservoirs.

Within this framework, hydraulic fracturing has gradually secured its place in the portfolio of production-enhancement methods—a position shaped not by trial and error, but by engineered, data-driven designs aligned with the real conditions of the fields. This approach paves the way for broader use of reservoir stimulation technologies in the coming years and can help return part of the country’s latent reservoir production capacity to the cycle of development and production.

Tech and Economics

At the same time as the global shift toward improving recovery factors and maximizing reservoir exploitation, hydraulic fracturing has become one of the main drivers of value creation in the oil industry. Estimates indicate that the Middle East hydraulic fracturing services market reached approximately $2.1 billion in 2024 and is expected to grow at a compound annual growth rate of 8.6% over the next decade—growth driven by regional countries’ focus on increasing production, reducing development costs, and accelerating the recovery of remaining oil.

The participants at the conference emphasized the fact that fracking is not merely a technical operation; rather, it is a link in the technological value chain starting from reservoir designing to implementation, monitoring and optimization. Mehdia Motahari, director of research and technology at National Iranian Oil Co. (NIOC), said EOR technologies would prove most effective when they are applied within the framework of an integrated view of the reservoir, well and installations.

Motahari emphasized the region’s capacities, adding that neighboring countries—including Saudi Arabia, the United Arab Emirates, and Iraq—have been able to consolidate their positions in the energy market through targeted investment in EOR technologies. According to him, Iran’s pursuit of this path, by relying on technical expertise, phased design, and the definition of well-targeted pilot projects, could also lead to sustainable and economically viable results—a course that, in addition to increasing production, would help foster a domestic market for technical and engineering services.

Alongside this approach, the role of academic and research institutions as a supporting arm for technological development was also highlighted. Azim Kalantari-Asl, director of RIPI, stressed at the conference that the institute is ready to stand alongside professional associations and active companies, deploying all of its scientific, laboratory, and educational capacities. In his view, synergy among industry, universities, and research centers provides the necessary foundation for institutionalizing technical knowledge and transforming it into operational solutions.

The synthesis of these perspectives shows that hydraulic fracturing is considered today not only as a means of increasing production, but also as an economic and technological opportunity for the Iranian oil industry; an opportunity that, with targeted management, can lead to both increased production and the development of the technical and engineering services market within the country.

Future Perspective

In Iran’s oil industry, hydraulic fracturing—drawing on global experience and tailored to the geological characteristics and reservoir behavior—is emerging as one of the reliable options within the production enhancement portfolio. What matters along this path is not merely the technology itself, but how it is applied through precise designs, targeted reservoir selection, and the alignment of operations with real field data—an approach that enables more effective use of existing capacities.

In the meantime, paying attention to hydraulic fracturing at this level means separating it from ad hoc and cross-sectional views and placing it in the context of operational planning. Linking this technology with other exploitation methods, using accumulated experience, and developing technical knowledge appropriate to field conditions creates an environment in which increased production is pursued not in a leap and short-term manner, but in the form of a manageable and gradual path.

Hydraulic fracturing, rather than being considered a "standalone solution," makes sense as part of an engineered view of the reservoir; a view that is based on precise understanding, step-by-step design, and continuous adaptation to field conditions, and can, alongside other technical tools, establish its place in the process of increasing production.

Europe Ending Russian Gas Imports Dependence

Shuaib Bahman

Intl. Affairs Analyst

Europe, as one of the world’s largest energy consumers, had taken the security of its fossil fuel supply for granted prior to Russia’s full-scale invasion of Ukraine in February 2022. The focus of European policymakers on the transition to renewable energy and carbon-neutral systems had led to the assumption that the existing system would continue without major challenges. However, Russia’s invasion called this assumption into question and confronted Europe with the harsh reality of its dependence on Russian gas.

Despite the various sanctions imposed by Europe on Russia, gas imports from this country still meet about 13% of Europe’s needs in 2025, with a value exceeding €15 billion. In this context, the European Union’s move toward a gradual ban on imports of Russian natural gas is, on the one hand, a response to Moscow’s “weaponization” of gas, which has disrupted Europe’s energy market, and on the other hand, an effort to strengthen energy security, diversify supply sources, and move toward an independent and sustainable energy market.

Ban on Russian Gas Imports

The European energy crisis has its roots in the decades of strategic dependence on Russian gas. Before the invasion, Russia was Europe’s largest gas supplier, and more than 40% of the European Union’s gas imports was delivered through four main pipelines: Nord Stream, Yamal, the Ukrainian transit route, and TurkStream. Countries such as Germany, as Russia’s largest customer, imported nearly half of their gas from this source, bringing this dependence to around 60% of Germany’s primary energy supply. However, the cutoff of Russian gas starting in May 2022 created enormous challenges. Europe faced the loss of vast volumes of pipeline gas, which were difficult to replace with LNG.

In the initial phase, Europe’s response consisted of reducing demand (by up to 20% in some countries such as Germany) and replacing supplies with LNG and alternative fuels. However, this transition came at a high cost: rising prices led to reduced output in energy-intensive industries such as chemicals and fertilizer production, and governments paid massive subsidies (for example, Germany’s support packages). From an environmental perspective, the crisis conflicted with Europe’s climate goals; replacing gas with coal or fuel oil increased carbon emissions and extended the operating lifetimes of nuclear power plants. For this reason, Europe moved toward designing more stringent measures, one of which was banning gas imports from Russia and replacing its needs through other sources.

The plan for the gradual ban on imports of Russian gas, which was preliminarily agreed upon by European Union members in early December 2025, is a symbol of the fact that the EU is redefining its energy relations in response to Russia’s war against Ukraine. This plan, which is considered part of the Europe’s energy redesign roadmap, is intended to end dependence on the Russian energy. It is based on a gradual and legally binding approach that prohibits imports of Russian gas in two categories:

1. LNG Timeframe
2. Short-term LNG contracts signed before 17 June 2025 will be banned starting on 25 April 2026.
3. Long-term LNG contracts will be permitted until 1 January 2027.

b) Timeline for Pipeline Natural Gas

1. Imports of pipeline natural gas (PNG) will be halted by mid-2027 (around September).
2. Long-term contracts will continue until the end of 2027, but any new extensions will be prohibited.

Meanwhile, changes to contracts are permitted only to a limited extent for operational purposes and may not increase import volumes. In addition, new customs procedures have been introduced that make gas imports subject to prior authorization; for Russian gas, information must be submitted at least one month in advance, while for  the non-Russian gas the deadline is five to seven days. Countries such as major gas producers that have exported more than 5 bcm to Europe and have restricted imports from Russia are exempt from this procedure, but the European Commission may update this list based on monitoring of sanctions circumvention. Moreover, all Member States are required to submit national diversification plans describing the challenges of ending imports from Russia, and the Commission will monitor existing contracts. This agreement is accompanied by effective penalties for violations, a temporary suspension clause in the event of an energy emergency, and a biennial review of implementation.

Economic, Political and Security Aspects

From an economic perspective, this agreement is a response to the sharp decline in the imports of Russian energy, which fell from 45% of gas and 27% of oil in 2021 to 19 percent of gas and 3% of oil in 2024, but it still creates financial risks. The remaining imports of Russian gas—mainly by countries such as Hungary (€416 million), Slovakia (€275 million), France (€157 million), as well as the Netherlands and Belgium—highlight the structural dependence of some member states on infrastructure such as the Druzhba pipeline. This ban could help increase imports from the United States (from 18.9 to 45.1 bcm) and from Norway, but it also poses challenges such as higher LNG costs and the need to expand regasification terminals.

From a political perspective, the agreement is a symbol of European unity in the face of Russia, but it also highlights divisions, such as Slovakia’s pressure to continue transit through Ukraine or Hungary’s threat to veto support for Kyiv. At the same time, energy security is a key issue: by reducing supply in recent years, Russia has disrupted the European market, and this agreement, by strengthening storage and diversification, reduces supply risks—although the suspension clause reflects concerns about sudden crises.

Stakeholders Approach

Russia, as a major exporter, is harmed by this agreement because the European gas market is a vital source of revenue (more than €15 billion annually). By “weaponizing” energy, Moscow has sought to divide Europe, but it has offset declining exports to Europe by increasing sales to China (€5.7 billion), India (€3.6 billion), and Turkey.

The European Union, under the leadership of the Commission, is focusing on diversification, but dependent countries such as Hungary and Slovakia are resisting and calling for temporary exemptions. The US, as the main driving force behind the agreement, benefits from it by increasing its LNG exports and weakening Russia. Ukraine also plays a key role: the end of gas transit through its territory in January 2025 will cut off transit revenues. Finally, players such as Norway and Qatar benefit from market opportunities as alternative suppliers, while China and India, by purchasing discounted Russian gas, are shifting the geopolitical balance.

Possible Outlooks

The Russian gas crisis, despite its initial hardships, pushed Europe toward greater resilience. By reducing its dependence on Russia from around 40% to less than 10%, substituting LNG supplies, and cutting demand, Europe managed to overcome the initial shock. However, the remaining dependence and external risks—such as the end of Ukrainian transit and US policies—continue to pose challenges.

At present, if the plan for the gradual ban on imports of Russian gas is successfully implemented, it would result in the complete elimination of dependence on Moscow by 2027. The consequences of such a move include reduced security risks, a strengthening of renewable energy (whose share would rise from 24.5% in 2023 to the target of 42.5% by 2030), and long-term economic savings, although it may be accompanied by temporary price increases—especially during winter.

If Europe fails to implement the plan for a gradual ban on imports of the Russian gas, it will continue to circumvent sanctions through countries such as Turkey or Republic of Azerbaijan. Although this would preserve both Europe’s dependence on Russia and Moscow’s revenues from energy sales, such a trajectory could also lead to political fragmentation and weaken the unity of the EU.

In any case, the agreement to ban imports of the Russian gas represents a culmination of EU efforts to free itself from energy dependence on Moscow, efforts that began with the outbreak of the Ukraine war in 2022. Nevertheless, challenges such as long-term contracts, existing infrastructure, and national differences highlight the political complexities involved. Ultimately, this agreement is a symbol of Europe’s determination to achieve energy independence, but its success depends on unity among member states and effective substitution, and it could serve as a model for managing future geopolitical crises.

Kuwait Investment in Offshore Exploration

In a world where energy remains the central driver of economic development and global geopolitics, oil-exporting countries play a key role in maintaining balance in the global markets. Kuwait Oil Company (KOC) recently announced that it intends to invest about $3.9 billion (equivalent to 1.2 billion Kuwaiti dinars) in oil exploration by 2030. This investment is part of the company’s historic budget, designed to increase oil production capacity to 4 mb/d by 2035 and maintain that level through 2040.

Meanwhile, Kuwait has achieved significant success in discovering offshore oil fields in recent years, and the country’s current oil development plan is now built on economic, technical, and geopolitical approaches. Therefore, analyzing this investment and examining its various dimensions for Kuwait’s economy, the Persian Gulf region, and the global oil market is of great importance.

Key Projects

Kuwait’s key projects through 2030 focus on the sustainable development of its oil industry. Chief among them is the expansion of existing fields to achieve a capacity of 4 mb/d by 2035 and maintain it through 2040. The development project of the Lower Fars heavy oil field in the Al-Jahra region will increase heavy oil production from 60,000 b/d to 270,000 b/d, using advanced technologies such as horizontal drilling.

In addition, the drilling and maintenance of more than 600 exploration and production wells, along with increasing gas output to 4 bcf/d, are part of this plan. The implementation of megaprojects to develop infrastructure such as refineries and transmission pipelines demonstrates Kuwait’s comprehensive approach, which not only increases oil production but also secures complementary revenues from gas.

These projects, some of which have been in the planning stage for years, are now being pursued seriously, and evidence of recent successes in offshore fields strengthens hopes for achieving the goals. Despite the advantages, there are significant operational challenges that could slow progress. The complexity of tendering and budgeting processes has led to delays and the cancellation of some

projects; for example, contractors often face repeated registration requirements that increase costs. An inefficient political system and disagreements among institutions hinder rapid consensus. Additionally, human resources management, especially dependence on foreign labor, and environmental challenges such as pollution from heavy oil extraction require cautious policymaking. Technical limitations in older fields and the need for advanced technologies are among the other impediments.

Geopolitical Significance

Kuwait’s investment in oil exploration is based on strategic considerations arising from the country’s need to maintain its competitive position in the global market. In this regard, several points are essential:

First, enhancing crude oil production capacity is necessary for Kuwait to preserve its market share in competition with regional producers such as Saudi Arabia and Iran. According to the announced plans, this investment will raise production to 4 mb/d 2035, which not only strengthens foreign-exchange revenues but also reinforces Kuwait’s position within OPEC.

Second, ensuring energy security through the exploration of new fields strengthens Kuwait’s oil-dependent economy against the decline of reserves. Countries like Kuwait, whose governments rely on oil for more than 90% of their revenues, would face severe economic risks without continuous investment in exploration.

Third, utilization of modern technologies, such as artificial intelligence in drilling and the development of deeper reservoirs, while enhancing efficiency reduces costs. For instance, the use of AI may improve reservoir-prediction accuracy by 20-30%, a rational conclusion based on recent technological advances in the oil industry.

Fourth, the geopolitical impacts of this investment can not be overlooked; as a key OPEC member, Kuwait may play a more influential role in regulating the oil market by increasing production and helping to prevent price volatility.

Fifth, forecasts of global oil demand for the coming decades, despite the growth of renewable energy, indicate ongoing economic opportunities. International reports, such as those by the International Energy Agency (IEA), confirm that oil will remain a primary energy source through 2050, which justifies this investment.

Vision

Kuwait’s $3.9 billion investment in oil exploration through 2030 is a smart strategy for safeguarding energy security, increasing production, and strengthening its geopolitical position. Analyzing its motivations, projects, challenges, and significance shows that this plan not only stabilizes the country’s national economy but will also influence the global oil market.

From a geopolitical perspective, this investment strengthens Kuwait’s position in the Persian Gulf and helps balance power against its competitors. Increased production may serve as a tool of political influence and play a role in regulating prices. From an economic standpoint, higher oil supply exerts downward pressure on prices and ensures market stability. Greater efficiency through modern technologies reduces production costs and makes Kuwait’s oil-based economy more sustainable. However, strengthening Kuwait’s position within OPEC through 2040 also requires managing geopolitical risks, such as regional tensions, over which the country has limited influence.

An In-Depth Story of Oil

(Part V: 1933 Agreement Replaces)

Elahe Baqeri Sanjarie

In 1901 William Knox D’Arcy, a British citizen, obtained a sixty-year concession to exploit Iran’s potential oil resources. Six years later, in 1907, the arduous exploration efforts paid off and oil was discovered.  Within two years, the Anglo-Persian Oil Company was established (later Anglo-Iranian Oil Company, and subsequently British Petroleum) to produce and bring the oil to world markets. Disagreements arose soon about the method of calculating, and the level of, royalties payable to the Iranian Government.

Repeated efforts failed to clarify and retrofit the concession to the satisfaction of both sides. Then in 1932, Iran unilaterally canceled the concession, resulting in a stand-off between Iran and Great Britain at the League of Nations and the Permanent Court of Justice.  A new agreement was reached in 1933 that addressed many of Iran’s demands while extending the concession for another sixty years, the latter leading many to criticize the deal and using it as an important pretext for the 1951 nationalization.

D’Arcy Torched

These efforts and pressures continued to such an extent that, finally, three days after Ali Dashti’s renewed protest, on 27 November 1932, a letter signed by Seyyed Hassan Taqizadeh, the Minister of Finance at the time, visited the AIOC. It stated: “From a legal standpoint, the government does not consider itself bound by the provisions of a concessionary contract that is not in Iran’s interests and that was signed prior to the establishment of the constitutional regime. Since AIOC has demonstrated its disregard for the government’s legitimate demands and for Iran’s interests, the government has had no choice but to annul the concession; nevertheless, it remains prepared to commence negotiations for the drafting of a new contract.”

On that day, which coincided with the Muslim Eid of Mab’ath, the Ettelaat daily newspaper wrote: “His Majesty Reza Shah, deeply angered by the continuation of fruitless negotiations with the oil company and their failure to reach any result, demanded the D’Arcy concession deed, rolled it up, threw it into the fire, and burned it. Then he said: ‘The D’Arcy concession is annulled”.

About a week after this letter, on 2 December 1932, the British Minister Plenipotentiary in Tehran submitted a note of protest to the Iranian government, warning that the British government would not hesitate, if necessary, “to adopt all legal measures to safeguard its legitimate and contestable interests.”

The British government also requested, on 14 December of the same year, that the Secretary-General of the League of Nations place the issue of the annulment of the concession and the dispute between Iran and Britain on the agenda of the Council, in accordance with the provisions of Article 15 of the Covenant of the League of Nations. According to this article, “whenever a dispute arises between members of the League which is likely to lead to a rupture, and that dispute has not been referred to judicial settlement or arbitration, it shall be referred to the Council.”

During the exchange of memorials between the two sides, the earlier objections and disagreements resurfaced, the most important of which concerned the validity or invalidity of the Armitage-Smith Agreement. The Iranian government regarded it as a new contract that required the approval of a newly elected parliament, whereas the British government viewed it as an explanation and interpretation of the provisions of the original contract, and therefore valid even without parliamentary ratification.

To address this dispute, the Iranian government also questioned the jurisdiction of the Permanent Court of International Justice in The Hague, maintaining that the case should be heard in Iranian courts. The British government, however, took a different view, arguing: “Since the Iranian parliament has approved the government’s decision regarding the annulment of the concession, there would be no benefit in referring the matter to Iranian courts.”

Untimely Intervention

Ultimately, after all these struggles, and before the Permanent Court of International Justice began to examine the dispute between the parties, the two sides, through the mediation of Dr. E. Beneš, who later became President of Czechoslovakia, agreed to suspend the legal proceedings and seek a satisfactory solution through direct negotiations. As a result, negotiations between Iran and AIOC took place in Geneva and Paris. Eventually, Sir John Cadman, Chairman of the AIOC Board of Directors, together with Sir William Fraser, came to Tehran and held talks with the Iranian delegation.

The members of the Iranian delegation were Mohammad-Ali Foroughi, Ali-Akbar Davar, and Hossein Ala. The outcome of these negotiations was the signing of a new contract on 29 April 1933, a contract known by that very name, the 1933 Agreement, which was formally concluded as an agreement between the Iranian government and AIOC. It functioned as a relatively restrictive replacement for the D’Arcy concession, intended to regulate and improve the terms of ownership and exploitation of oil resources. Yet perhaps neither Reza Shah, nor the members of the parliament, nor the public ever imagined that the British government had compelled Iran to sign a contract far more ignominious than the D’Arcy Agreement itself.