Postwar Iran; Opportunity for Investment in New Mideast

Mohsen Paknejad

Minister of Petroleum

The Middle East has entered a new competition to attract capital after the US-Iran war—a race in which the reconstruction and modernization of energy infrastructure have become as important as the development of new capacities. In this context, Iran wants to emerge not merely as a country in the process of reconstruction, but as one of the world’s largest energy markets.

Although the Ramadan War inflicted damage on parts of Iran’s energy infrastructure, the country’s oil industry once again demonstrated its ability to manage crisis. Crude oil and petroleum product production did not halt, and the reconstruction of damaged facilities began without waiting for foreign investors to step in. This experience carries a clear message for international investors: Iran’s petroleum industry is a resilient sector, capable of weathering crises and making a swift return to the path of development.

Now, with the signing of a memorandum of understanding (MOU) between Iran and the United States, as well as OFAC’s announcement granting authorization for the sale of Iranian crude oil, petroleum products, and petrochemical products until August 21, new conditions have emerged for the country’s energy industry. These developments are not merely a political opening, but also an economic signal to global markets—that Iran could be one of the most important energy investment destinations in the postwar Middle East.

The Middle East has entered a new phase after the recent war—a period in which investment in energy no longer simply means developing new capacities, but has also made reconstruction, modernization, and the hardening of infrastructure a strategic priority.

Many countries in the region are seeking to attract capital to reconstruct their energy sectors, and a new competition has begun for international financing and technology. In this race, however, Iran possesses an advantage that few countries in the region can offer: the world’s largest combined reserves of oil and gas, extensive oil, gas, refining, and petrochemical infrastructure, a vast network of contractors and equipment manufacturers, and decades of experience in development under the most difficult conditions.

One point that should not be overlooked by investors is that Iran is not a market starting from scratch. Much of the core infrastructure of this industry was developed during the difficult years of sanctions, and today it has formed an extensive network of facilities, downstream industries, contractors, and domestic manufacturers. Unlike many countries in the region that are still in the process of building new capacities, Iran—by relying on its existing infrastructure and leveraging foreign capital and technology—may more quickly enter a new phase of growth, reconstruction, and productivity enhancement.

Estimates indicate that Iran’s oil industry—excluding the costs of reconstruction of war-related damages—requires over $200 billion in investment for development across upstream, midstream, and downstream sectors. This capacity not only creates diverse opportunities for investment but also opens the door for large-scale technical and financial partnerships.

Therefore, I believe that Iran’s petroleum industry, in the post-agreement era, represents the largest arena for presenting investment opportunities and technical and financial partnerships to the global economy. If the stakeholders of the agreement in the West remain committed to its spirit, Iran’s petroleum industry will be the proving ground for that commitment.

At present, hundreds of vetted investment opportunities and contractual frameworks for investment, technical partnerships, and operational collaboration are ready in Iran, and we are prepared to review cooperation proposals and advance them to the executive contract stage in the shortest possible time.

However, I would like to emphasize that the Ministry of Petroleum, in line with the government and the presidency, views the end of the war as a gateway not only to Iran’s progress but also to the realization of global peace through economic cooperation. We remain eager to sustain and elevate collaboration with our traditional partners—companies and countries that continued to work with the oil industry of the Islamic Republic of Iran during the years of sanctions.

In a region that needs capital, technology, and reconstruction more than ever, let us convey this message to the world: “Iran’s petroleum industry has not only weathered the war, but is ready to become one of the main drivers of energy development in the new Middle East.”

BRICS, Chance for Iran to Boost Global Standing

Amid a global energy market still influenced by geopolitical uncertainties, supply security concerns, investment volatility, and the imperative of transitioning toward a more sustainable system, the 11th Meeting of BRICS Energy Ministers was held in Gurugram, India, during June 25–26, serving as a platform for charting a roadmap for cooperation among emerging economies and major energy producers.

Within this framework, the Islamic Republic of Iran, leveraging its production capacities, geopolitical position, and extensive energy infrastructure, sought to solidify its standing as an effective player in global energy security and a reliable partner for BRICS member states.

Mohsen Paknejad, Iran’s Minister of Petroleum, stated at the meeting that BRICS member states share a collective responsibility to maintain stability, prevent disruption in energy markets, and ensure the uninterrupted flow of energy resources.

He proposed that the “BRICS Energy Security Partnership” be pursued within the framework of the BRICS Energy Cooperation Roadmap 2025-2030, aimed at enhancing resilience, stability, and security across the entire energy value chain in the member countries.

Minister Paknejad’s attendance at this meeting, in addition to emphasizing the development of multilateral and bilateral cooperation, also provided a picture of the latest status of the country’s oil and gas industry—an industry that, despite years of sanctions, has continued its capacity development process. According to figures announced by the minister, in 2025, Iran’s total natural gas production exceeded 280 bcm, equivalent to approximately 7% of global gas output. Furthermore, the country’s crude oil production capacity has reached 4.2 mb/d, and its refining capacity for petroleum products has reached 2.4 mb/d. Possessing an extensive network of oil, gas, and petroleum product pipelines, along with the country’s electricity generation capacity surpassing 100,000MW, represents part of the capabilities that Iran considers as a foundation for playing a more active role in BRICS energy cooperation trend.

This meeting took place at a time when BRICS is increasingly transforming from an economic coalition into a mechanism for coordination in areas such as finance, technology, energy security, and sustainable development. Iran’s active presence in this process, in addition to strengthening energy diplomacy, may create new opportunities for attracting investment, technology transfer, and expanding technical cooperation with the world’s emerging economies.

Consultations in India

Paknejad stated that the main focus of the 11th BRICS Energy Ministers Meeting was to review the achievements and initiatives of BRICS members in pursuing sustainable development in the energy sector, as well as to discuss cooperation capacities within the framework of the body. Upon his arrival in India, he emphasized the historical background of relations between Tehran and New Delhi, noting that Iran and India have enjoyed long-standing historical ties for centuries. Therefore, he expressed Iran’s readiness to expand relations with India in all areas, particularly in the energy sector.

On the first day of his visit, Paknejad met with Shri Manohar Lal, India’s Minister of Power, Housing, and Urban Affairs, and held talks on expanding economic and energy cooperation. Additionally, a meeting with Hardeep Singh Puri, India’s Minister of Petroleum and Natural Gas, was among the most significant items on theMinister’s itinerary.

During this meeting, the two sides discussed the development of cooperation in the fields of oil, gas, refining, petrochemicals, energy trade, and investment. These negotiations took place at a time when India, prior to the imposition of U.S. sanctions, was one of the largest buyers of Iranian oil, and now the two countries are making efforts to explore new avenues for cooperation, including the utilization of the capacities of Chabahar Port and joint energy projects.

Minister Paknejad also met with South Africa’s Minister of Electricity and Energy on the sidelines of the BRICS meeting. During this meeting, the two sides stressed the development of bilateral cooperation in the energy sector—a matter seen as being in line with strengthening South-South cooperation and leveraging the mutual capacities of BRICS members.

Digital Center of Excellence

The inauguration of the BRICS Digital Excellence Center was another item on Paknejad’s itinerary. Paknejad attended the opening ceremony of the “BRICS Digital Excellence Center for Smart Grids and Energy Storage.”

He described the center as “an important step and a milestone in the development of energy cooperation among BRICS member countries” and stated that this initiative could help strengthen energy security, facilitate technology transfer, develop technical capacities, reduce technological gaps, and accelerate the development of modern energy infrastructure in member states.

He also announced Iran’s readiness to actively participate in the exchange of knowledge, technology, and experience among BRICS members.

Indiscriminate War on Energy Security

On June 25, attending the 11th BRICS Energy Ministers Meeting, Paknejad referred to the “Ramadan War” and stated: “I come from a proud Iran—a country that over the past months has powerfully defended itself against attacks by the Zionist regime and the United States, enduring significant material and spiritual losses, including the martyrdom of the Supreme Leader of the Islamic Revolution, scientific and military figures, and a number of innocent civilians—among them 168 students from Shajareh Tayyebeh School in Minab.”

Paknejad went on to highlight the

multiple aggressor attacks on Iran’s oil, gas, refining, and petrochemical infrastructure during this period, adding: “The attacks were not merely an assault on a country’s vital infrastructure, but a blind war against global energy security.”

He said: “They have caused damage to facilities, resulted in the martyrdom and injury of a number of oil industry employees, led to extensive environmental consequences, disrupted the production of raw materials and the supply chain of essential goods needed for the daily lives of the Iranian people, and destroyed the income and employment of thousands of families in the Persian Gulf coastal region.”

“We are now witnessing that the repercussions of such aggression have contributed to an energy crisis, rising global prices of raw materials and manufactured products, economic pressure, and increased living costs for many civilians. These aggressive actions constitute a flagrant violation of international law and, specifically, the United Nations Charter, and must be condemned at every level,” said the minister.

Reiterating the Islamic Republic of Iran’s stance, he once again declared that the only path to stability and security in West Asia is the withdrawal of military forces of foreigners from the region, the dismantling of American bases, and entrusting the security of this strategic region to its own countries.

He added: “Today, the global energy system faces unprecedented challenges and growing uncertainties more than ever before, and ensuring sustainable energy supply has become a primary concern for statesmen and policymakers in most countries.

“Rising energy demand, geopolitical risks, unpredictable market fluctuations, global warming, investment constraints, and the urgent need to guarantee affordable energy access for all; are among the global challenges that cannot be addressed by one or two countries alone—they require international cooperation and the adoption of pragmatic and realistic policy approaches at the global level,” said the Minister.

Global Energy Security at Risk

Among the notable points in Paknejad’s speech was his perspective on the clean energy transition approach. Referring to discussions in recent years on this subject, he stated: “In recent years, we have witnessed that the clean energy transition approach—through the rapid phase-out of fossil fuels from the energy system—has been presented in international climate change negotiations as a definitive solution to combat global warming.”

“However, while stressing the need for collective action to mitigate climate change, this warning must also be taken seriously: adopting unilateral and eliminationist policies in the energy system jeopardizes global energy security and deepens energy poverty in many communities and deprived regions around the world. This is while, to prevent such risks, all energy sources and technologies must play a role in meeting growing energy demand.”

He added: “Realistic scenarios for global energy outlooks—including the OPEC World Oil Outlook 2026, released on June 18—project that oil and gas will still account for more than 53% of the world’s energy needs by 2050, and no peak in global oil demand is foreseen by the 2050 horizon."

“Moreover, despite the development of renewables in recent years, the share of fossil fuels in global electricity generation remains substantial, with oil accounting for about 57%, and by 2050, this share is expected to be around 34%,” said Paknejad. “Oil continues to be the backbone of the world’s transportation and industrial sectors, while natural gas—with its cleaner burning, flexible applications, and expanding infrastructure—plays a pivotal role in the energy transition.”

Investment Gathering Pace

Paknejad said: “In light of the above realities, the Islamic Republic of Iran believes that within the framework of a just, orderly, and inclusive energy transition, global investment in the oil and gas industry and decarbonization technologies must be rapidly increased to achieve sustainable conditions in energy supply and combat global warming.”

He noted that the BRICS platform offers exceptional potential for energy cooperation, saying: “The member countries altogether account for a significant share of global energy production, consumption, reserves, and innovation capacity. We can harness this collective strength to advance development across various energy sectors—including oil and gas, renewables, power grids, hydrogen, energy efficiency, artificial intelligence, and the digitalization of the energy sector.”

He added: “The Islamic Republic of Iran, as one of the world’s largest oil and gas producers, and despite years of sanctions-related challenges, has succeeded in achieving its goals in developing energy infrastructure. In 2025, Iran’s total annual natural gas production exceeded 280 bcm, equivalent to about 7% of total global natural gas output.”

“Furthermore, Iran’s crude oil production capacity reached 4.2 mb/d, and its refining capacity reached 2.4 mb/d. In the area of energy transmission and transportation, Iran benefits from thousands of kilometers of pipelines of various dimensions and capacities, providing a high capability for transporting crude oil, petroleum products, and natural gas,” said Paknejad, adding: “Meanwhile, Iran’s power generation capacity has surpassed 100,000 megawatts, and the process of increasing power production from both fossil and non-fossil energy sources is being pursued within the country’s development program.”

“The Islamic Republic of Iran is ready to play a dynamic role in energy cooperation among BRICS member countries. We share our vast energy resources, world-class technical expertise, strategic position, and—most importantly—our willingness to engage in constructive cooperation to help shape a fair and secure global energy order within the BRICS framework,” the minister said.

BRICS Energy Security Offer

Paknejad said: “At a time when the dynamics of the global energy market are facing severe risks and threats due to the increasing imposition of trade measures and sanctions under false pretexts against countries possessing large oil and gas reserves, BRICS members share a collective responsibility to maintain stability, prevent disruption in energy markets, and ensure the uninterrupted flow of energy resources—so that both dimensions of energy security, namely security of supply for consumers and security of demand for producers, are realized.”

“As a practical step, this matter may be pursued under the title: BRICS Energy Security Partnership’ within the framework of the BRICS Energy Cooperation Roadmap 2025–2030, with the aim of enhancing resilience, stability, and security across the entire energy value chain in member countries,” he said.

He added: “In this context, one could expect the facilitation of regular information exchange on energy market developments, cooperation in protecting critical energy infrastructure, enhancement of emergency response capabilities, and encouragement of investment in strategic energy projects, and support for the continuous flow of energy supply among BRICS members to be operationalized.”

“Achieving secure, affordable, reliable, sustainable, and inclusive energy depends on collective effort and cooperation from all of us. The Islamic Republic of Iran is ready to engage actively and constructively with all BRICS members in realizing this strategic goal,” Paknejad said.

Investment Talks

Minister Paknejad’s visit to India was not limited to participation in the official BRICS meeting. Following the conclusion of the relevant meetings, Paknejad announced on his personal X (formerly Twitter) account that, in addition to presenting Iran’s perspectives on energy security and the effects of war on the oil market, he had also held discussions with Indian officials regarding participation and investment in Iran’s oil industry projects.

These negotiations could be seen as a sign of Iran’s effort to utilize the BRICS platform not only as a political and economic forum, but also as a venue for attracting investment, developing technological cooperation, and implementing joint projects in the oil, gas, refining, and petrochemical industries—a path that, if sustained, could further strengthen Iran’s position in the new energy architecture of emerging economies.

Post-Agreement Petroleum Industry

Foreign Investment to Facilitate Iran Development

Iran, for years under the shadow of sanctions, has been developing its infrastructure, expanding its energy network, and strengthening its position in global markets. With the prospect of sanctions relief and a reduction in regional tensions, it can become a highly favorable destination for foreign investors—because in this land, the petroleum industry is approaching its 120^th anniversary, and throughout these years, it has consistently grown and developed.

As Minister of Petroleum Mohsen Paknejad pointed out in his note titled “Iran’s Oil in the Post-Agreement Era,” saying: “Today, the independence of the oil industry in technical areas—from exploration to production, processing, and export—is the industry’s greatest strength, enabling it to serve as a foundation for progress across all arenas.”

Therefore, the entry of foreign investors does not signify the beginning of development, rather it aims to facilitate and accelerate projects that Iran had already been carrying out on its own.

Story of Bottlenecks

For years, Iran has been under the harshest sanctions and US unilateral restrictions. These sanctions intensified further following the 12-Day War and its aftermath. At the same time, Iran was unwilling to disregard its national pride, dignity, and the interests of its people; therefore, it did not consent to previous agreements and consistently insisted that Iran’s demands must be met. It was only after the third imposed war that Iran’s resistance and defensive capabilities convinced the other side to concede to Iran’s legitimate and fair demands. Finally, on June 18, a 14-point memorandum of understanding (MOU) was signed by President Masoud Pezeshkian and his US counterpart Donald Trump to halt hostilities, reopen the Strait of Hormuz, and work toward resolving the intertwined issues of Iran’s nuclear program and US sanctions.

This memorandum marks the beginning of negotiations that are set to reach a conclusion within 60 days, and if a favorable outcome is achieved, the timeline may be extended.

Iran Resilience a Decisive Factor

This MOU could mark an end to hostilities and military attacks and herald the beginning of a diplomatic process between the United States and Iran—one that will prove decisive in shaping future bilateral relations, matters of war and peace in the Middle East, and the global economy. This is because Iran is situated in one of the most sensitive geopolitical positions in the world and plays a highly influential role in regional and global markets. Although the world powers have long tried to overlook this role, they ultimately had no choice but to acknowledge it, as Iran proved its domestic strength and capability.

In affirming Iran’s domestic strength and capability, it is worth reviewing the conditions of the past year and Iran’s resilience: At the start of last calendar year (March 2025), Iran faced intensified sanctions and global threats, and right in the middle of negotiations, the 12-Day War and enemy attacks on Iran began. Following that, during a ceasefire, the snapback mechanism process was activated, and UN Security Council sanctions against Iran were reinstated by the three European countries—the UK, France, and Germany.

Against the backdrop of these escalating threats and sanctions, political tensions mounted, and once again, in the midst of negotiations, the third imposed war broke out. Though this conflict bore the name of a military operation, its primary objective was the collapse of Iran’s infrastructure and energy network—a goal that the US and Zionist Regime had predicted would be achieved in a short time, leading to Iran’s disintegration through the destruction of its energy infrastructure. However, through the round-the-clock efforts of experts and personnel across all sectors of the petroleum industry, all those calculations were proven wrong.

Unrivaled Role of Hormuz

On the other hand, following the onset of attacks, from February 28, Iran blocked maritime traffic through the Strait of Hormuz. Since the Strait of Hormuz is one of the world’s most critical maritime chokepoints for energy trade, its closure sparked widespread concerns over long-term supply shortages, and oil prices surged at an unprecedented rate in modern history.

The most important common finding of all specialized international reports also confirms the irreplaceable role of the Strait of Hormuz in global energy trade. According to OilPrice reports, approximately 20 million barrels of oil pass through this waterway daily—a figure equivalent to about 20% of global petroleum liquid consumption. Additionally, about one-fifth of global LNG trade is conducted via this same route. These statistics demonstrate that closure of the Strait of Hormuz  by Iran was not an empty threat, rather it was a leverage point that it had refrained from using for years to demonstrate goodwill and a commitment to peace.

However, given the onset of the imposed war and mounting pressures, it put this measure into effect—an action that is not merely a problem for a few oil-exporting countries, but directly impacts the energy security of Asia, Europe, and even North America, and the world has yet to find an alternative to this vital route.

This move proved so formidable for the US and other nations—especially European countries—that after negotiations in Islamabad failed to yield results for reopening the Strait of Hormuz, the US, starting from April 13, in response to the closure, initiated a naval blockade of Iran.

Domestic Potential

Let us step back from the events of the past year and look further into the past—to the years when, on the political front, news of new sanctions and escalating international restrictions was constantly being published, while on the energy front, every month and every day, a new project was either being launched or coming on stream. The keyword for all these projects was the same: reliance on technical expertise, the capabilities of domestic specialists, and localization.

This capability ensured that throughout all those years of sanctions; we not only did not fall behind in production and development, but also kept pace with competitors in the global energy market and consistently maintained our position among the top few countries in producing and exporting oil, gas, and petrochemical products.

With Iran’s assumption of control over the Strait of Hormuz, self-sufficiency and reliance on domestic capabilities, coupled with resilience, steadfastness, and the maintenance of production and fuel supply during the attacks of the third imposed war, global attention has increasingly turned toward Iran and its capacities, making it an attractive option for investors.

This point can be seen in certain provisions of the MOU: In Article 4 of the MOU, it is stated that immediately after the signing of this MOU, the US will lift the naval blockade, refrain from any interference or obstruction against the Islamic Republic of Iran, and restore maritime traffic to full capacity within a maximum of 30 days. The volume of vessel traffic will be set by the Islamic Republic of Iran in accordance with pre-war traffic levels. The US also undertakes to withdraw its forces from surrounding areas within 30 days of the final agreement.

Article 5 of this MOU refers to the fact that after signing, the Islamic Republic of Iran will immediately take measures to resume the movement of commercial vessels from the Persian Gulf to the Sea of Oman and vice versa, so that within a maximum of 30 days, traffic volume returns to pre-war levels; this will be carried out taking into account the need to remove technical obstacles and clear mines by Iran.

Article 10 also points to a provision that underscores the importance and standing of Iran’s oil industry in the global energy market: It states that the US undertakes, immediately after the signing of this MOU and until the lifting of sanctions, to have the US Treasury Department issue waivers for the export of Iranian crude oil, petrochemical products and their derivatives, and all related services, including banking, insurance, transportation, and similar services.

Another noteworthy issue—one that could pave the way for attracting foreign investment and, on the other hand, confirms political stability and investment security in Iran—relates to Article 6 of this MOU: It states that the US undertakes, together with its regional partners, to establish a comprehensive program mutually agreed upon by both parties for the reconstruction and economic development of the Islamic Republic of Iran, and to guarantee the financing of at least $300 billion. The implementation mechanism for this program will be developed within 60 days as part of the final agreement.

Post-Agreement Era

In any case, what has been variable throughout this period and has continually intensified is the international pressure and economic restrictions on Iran, while what has remained steadfast and resolute in its place is the continuous development and production in the oil industry.

Therefore, the post-agreement era will only smooth the path of development and progress for the oil industry; because the industry has experienced sanctions more than any other sector in the country and has gained extensive experience in technical and operational self-sufficiency. Thus, the lifting of sanctions and the entry of foreign investors will enable the oil industry to traverse its main path—which has been rooted in domestic capability and expertise—more easily.

As Minister Paknejad put it in his note titled “Iran’s Oil in the Post-Agreement Era”: “Today, the independence of the oil industry in technical matters—from exploration to production, processing, and export—is the industry’s greatest strength, enabling it to serve as a foundation for progress across all arenas. Iran’s oil industry in the post-agreement era represents the largest arena for presenting investment opportunities and technical and financial partnerships to the global economy. If the stakeholders of the agreement in the West remain committed to the spirit of the agreement, Iran’s oil industry would be the testing ground for that commitment. Hundreds of vetted investment opportunities and our investment contract formats and frameworks for technical and operational partnerships are ready. We are prepared to review cooperation proposals in the shortest possible time and bring them to the stage of executable contracts. Furthermore, hundreds of capable and entrepreneurial domestic enterprises have been identified within Iran as potential Iranian partners for foreign investing companies, and the Ministry of Petroleum is ready to rapidly organize working groups of investors and developers. The Ministry of Petroleum, in accordance with the esteemed government and the esteemed President, regards the conclusion of the war as a gateway to Iran’s progress and to the realization of global peace through economic cooperation. We remain eager to sustain and enhance cooperation with our old partners—companies and countries that continued to cooperate with the oil industry of the Islamic Republic of Iran during the sanctions era. However, none of these managerial inclinations will make us sit idly by, waiting for others, or allow the allure of foreign capital to weaken our operational resolve. Iran’s oil industry, which did not flinch for 40 days at the forefront of battle, will from now on continue its path with dignity and vigilance. If foreign capital comes, we are ready; if it does not, we are Iranians, and we will continue unwaveringly on the path of our nation’s progress.”

Sanctions Waivers

Other articles in the MOU refer to respect for the sovereignty and territorial integrity of the two countries and non-interference in each other’s internal affairs, while Article 11 addresses the return of frozen assets. According to this article, the US undertakes, in light of the progress of negotiations toward a final agreement, to release and make fully available the funds and assets of the Islamic

Republic of Iran that have been blocked or restricted. These funds, whether held in the original account or transferred, will be usable for any payment to the ultimate beneficiary designated by the Central Bank of the Islamic Republic of Iran and will be fully accessible. The US undertakes to issue all necessary permits and licenses in this regard.

This article, along with Article 10—which refers to waivers from the US Treasury Department for the export of Iranian crude oil, petrochemical products, and their derivatives—were, according to Esmaeil Baqaei, the spokesman for Iran’s negotiating team, two very important issues. After the first day of talks on May 24 in Switzerland, he noted that favorable progress had been made regarding the issuance of oil sales licenses and the release of Iran’s assets, explaining: “A text was issued by the two mediators—Qatar and Pakistan—which included the general principles of these matters. This text has been presented as a document of the agreements reached during this round of negotiations.”

“But beyond this document and the joint statement of the two mediators, the two issues of issuing the necessary licenses for the export of petrochemical and oil derivatives, as well as the release of Iran’s blocked assets and funds, are important; because according to Article 13, these steps must be taken before we can enter the phase of negotiations for a final agreement. Regarding the release of assets, practical steps must also be taken concerning oil sales,” he added.

Article 13 states that after the signing of this MOU and upon receiving guarantees regarding the commencement of implementation of Articles 4, 5, 10, and 11 of this MOU and the continuation of these measures, the Islamic Republic of Iran and the US will enter into negotiations on the remaining issues for a final agreement.

Following this round of talks in Switzerland on June 22, the US Office of Foreign Assets Control (OFAC) announced that, with the aim of implementing the Iran-US agreement signed on June 18, it had issued a license for the sale of Iranian crude oil, petroleum products, and petrochemicals until August 21.

According to the OFAC license, binding transactions for the production, sale, transport, and discharge of crude oil, petroleum products, and petrochemical cargoes are authorized—including transactions related to the safe berthing and anchoring of tankers carrying Iranian crude oil, petroleum products, and petrochemicals; maintaining the health or safety of tanker crews, emergency repairs, or activities related to environmental protection of tankers and cargoes stored in storage tanks; and services such as tanker management, crewing, bunkering, port pilotage, registration, flagging, insurance, classification, and salvage operations.

One week after the issuance of this license, on June 26, Minister Paknejad, at the 11th Meeting of BRICS Energy and Oil Ministers, following meetings with Indian officials, reported on negotiations regarding participation and investment in Iran’s oil industry projects. On the sidelines of this meeting, he also held talks with the Minister of Electricity and Energy of South Africa regarding the expansion of bilateral cooperation in the energy sector.

Development Under Way

Following the signing of the MOU, the Strait of Hormuz has been reopened to tanker traffic, and the waivers for the sale of Iranian crude oil, petroleum products, and petrochemicals have been implemented. These developments and the easing of tensions between Iran and the US may strengthen Iran’s role in the global energy market more than ever before and attract a greater number of investors to this sector—an outcome that could have a direct impact on energy security and supply balance in the global markets.

On the other hand, the capacities and capabilities that Iran developed during the years of sanctions, the infrastructure it established, and the technical expertise it acquired have all created a suitable foundation for development, and this very fact will further boost investor interest in the oil industry. This is because this land is not at the starting point of development; rather, development is already underway, and the presence of investors will only accelerate its pace and facilitate its trajectory.

CEO Tells Iran Petroleum

ICOFC Offers $10bn Investment

As geopolitical tensions subside in the region, hoped to lead to a thaw in Iran’s economic relations, the oil and gas upstream sector will be among the first areas to host new foreign investment. Iranian Central Oil Fields Co. (ICOFC), as the largest operator of onshore oil and gas production in Iran, has prepared itself for this phase with a portfolio of development projects, production enhancement plans, and diverse cooperation models. Peyman Imani, the CEO of ICOFC, has highlighted investment potential, development priorities, and the company’s plans for cooperation with domestic and international investors. He told “Iran Petroleum” ICOFC had $10 billion worth of investment projects.

Currently ICOFC is Iran’s second largest gas producer. What areas in the country does ICOFC cover and what fields does it administer?

ICOFC is responsible for gas production across Iran’s mainland, and its operational activities are currently carried out in 14 provinces, with projections indicating an increase to 18 provinces in future development activities. All of our operations are conducted within three main companies: South Zagros Oil and Gas Production Co. (SZOGPC), based in the city of Shiraz in the southern Iran, which is in charge of oil and gas production and extraction from the southern provinces; West Oil and Gas Production Co. (WOGPC), headquartered in the city of Kermanshah, which oversees gas production from the Tang-e Bijar gas field and oil fields in border areas in the west and southwest of the country; and East Oil and Gas Production Co. (EOGPC), located in the northeast, with its center in the holy city of Mashhad, at the far end of the country’s gas distribution network, holds particular significance as it supplies gas to the provinces of Khorasan Razavi, South Khorasan, North Khorasan, Golestan, and parts of Semnan and Mazandaran in the northeast of Iran.

What is ICOFC’s current share of national oil and gas production?

Currently, about 25 to 30% of national gas is produced within the operational scope of this company; in other words, my colleagues across all operational areas are responsible for producing approximately 250 mcm/d of gas though this volume may fluctuate at different times depending on the country’s needs and prevailing conditions. Among the company’s other responsibilities is the eight-month underground gas storage in the Sarajeh (Qom) and Shourijeh (Sarakhs, Khangiran) reservoirs during the warm seasons, which is then reproduced over the four cold months of the year, serving as a reliable backup for peak shaving periods in winter.

Given that over the past year we have gone through a 12-Day War and the Third Imposed War, what is the current status of field development projects and measures to prevent natural decline in this company?

Due to its vast geographical scope across the country, ICOFC is responsible for the critical tasks of production, extraction, and transfer of oil and gas to refineries and delivery points, and therefore may play an effective role in tense situations. Following the incidents during the imposed war at the South Pars refineries, my colleagues and I in the technical engineering and construction management departments reviewed all the fields that had the potential for development and early production by ICOFC, and compiled our findings into a formal report submitted to the CEO of National Iranian Oil Co. (NIOC). We hope that through a comprehensive review of this company’s proposals, along with the provision and allocation of financial resources and equipment—including drilling rigs—positive steps will be taken toward the development of the company’s gas fields.

Which are the priority projects and fields for the coming year or two?

Our target for this year is a production hike of 15.7 mcm/d year-on-year, and the cumulative figure for this increase—accounting for the reduction in turnaround/maintenance downtime and the resulting production gain—will amount to over 12 bcm by the end of the year. Regarding the medium-term plans we have defined in this company, a scheduling framework spanning 14 to 30 months has been developed for early and medium-term production start-ups, respectively. It is projected that within the 14‑month plan, production from new fields will reach up to 10 mcm/d, and by the end of the 30‑month program, it will increase to 25 mcm/d. In undeveloped fields, extensive infrastructure work is required to achieve initial production. Our colleagues in the Directorate of Investment and Directorate of Engineering and Development of NIOC are currently engaged in technical, financial, and contractual negotiations concerning undeveloped fields, aiming to select contracting companies through attracting investors under EPCF (Engineering, Procurement, Construction, and Financing) contracts or IPC (Iran Petroleum Contract) models, and then introduce them to ICOFC to commence development operations. However, given the lengthy negotiation process and the fact that obtaining the relevant permits involves its own hierarchical and time‑consuming procedures, my colleagues and I at ICOFC have taken the initiative and accepted the responsibility that, if the necessary permits and required resources are made available to us, we may carry out the early development of a number of fields using the capabilities we possess within the company. In fulfillment of our duty to enhance production, and also during periods when the country faced difficult conditions—whether due to sanctions or the outbreak of war—we managed to develop three gas fields and achieve their initial production and early‑phase start‑ups: the Dey field two years ago, and the Tous and Khartang fields last calendar year (to 20 March 2026), bringing them into production and operation precisely at a time when the country was under severe strain due to banking, logistical, and shipping sanctions. We brought the Khartang field online at the height of the war, exactly on March 16, and we have new plans to further upsurge production and maximize recovery from these fields. It is anticipated that, with the scheduled plans for increasing and sustaining production from other fields, by the end of this year—in addition to projects aimed at production rate maintenance—we will bring online two new wells in the Tous field, two in the Khartang field, and one in the Dey field, adding 15.7 mcm/d to our production capacity. Another major project of ours related to production is the commissioning of the Homa gas field compressor station in the south of Fars Province, which has become necessary due to reservoir pressure decline that has reduced output from this field. Our colleagues are currently working at the Homa field, carrying out pre‑commissioning and station preparation activities, with the station slated to come online in autumn 2026. According to projections, the start‑up of this compressor

station will have a very positive impact on enhancing production, and we expect to see a production growth of approximately 5.5 mcm/d.

Which new fields and phases are to be developed?

The fields of Eram, Gordan, Pazan, Madar, Halgan, Shahini, Sefid Zakhur, Sefid Baghun, South Geshu, the Khami layer of the Sarkhun field, Khartang Phase 2, and the Babaqir field in the western are among the new development fields, and some of them are included in our proposals. Khartang Phase 2 is one of our main proposals, as this field has high potential. In this field, during the early phase, we will achieve an output hike of 5 mcm/d, which is projected to reach 10 mcm/d by the end of Phase 1, and from Phase 1 to Phase 2, we expect an additional production increase of about 10 mcm/d. Furthermore, the development of the Khami layer of the Sarkhun field and the sweet layer of South Geshu, in addition to boosting production, may consistently supply feedstock to the Sarkhun refinery in Bandar Abbas for several consecutive years and resolve the operational challenges that the refinery is currently facing. It is projected that with the commissioning of all the new fields over a two‑year period, at least 20 mcm/d will be added to the country’s gas production. In general, the development of new fields takes about 4 to 5 years, but in cases such as the Tous, Dey, and Khartang fields, we managed to achieve early production in even less than 2 years. Overall, with the implementation of all new onshore gas development projects, between 100 and 140 mcm/d will be added to national gas production.

As far as increasing and sustaining production is concerned, what other measures are on your agenda besides development fields?

At the Dalan field, drilling operations for one well will be completed and brought online by the end of the current calendar year. At the Khangiran field, one new well will also be added. In fields where production maintenance must be achieved through existing wells, we have carried out numerous measures for well preparation and removing downhole obstacles. One very effective action we have taken over the past year and a half, both in gas fields and oil fields, has been the reactivation of abandoned wells that had been out of service for years due to production constraints. Through a continuous and structured weekly program, we pursue these wells in coordination with the subsidiary operating companies and bring them back into production. Last calendar year (to 20 March 2026), we were able to add over 5.7 mcm/d of gas and 6,600 b/d of oil through the reactivation and return to production of these wells. In this regard, we may mention the restart of two wells and capacity increases at the Nar, Kangan, Shanul, Homa, Varavi, and Tang-e Bijar fields, which had been facing reservoir problems and downhole production obstructions. Additionally, in the oil fields of Dehloran, Khesht, and Danan, we achieved production capacity increases through downhole repair operations.

Given Minister of Petroleum Mohsen Paknejad’s emphasis on flare gas capture, what has ICOFC done?

By August 2025, the NGL 3100 plant was commissioned, with its feedstock supplied by flare gas from fields in the west of the country, particularly the Cheshmeh Khosh field and its satellite fields such as West Paydar, East Paydar, Aban, and Dalpari. A phased schedule was defined, under which, in the first phase, the associated petroleum gas from Cheshmeh Khosh was captured, compressed, and sent via the Cheshmeh Khosh Compressor Station. Subsequently, in the autumn of 2025, the Dehloran Gas Compressor Station was brought online, capturing associated petroleum gases from Dehloran and Danan and transmitting them to the NGL 3100 unit. Additionally, a portion of the associated petroleum gases from the Azar oilfield was also transferred to this complex. Through these measures, we were able—for a period prior to the 40-Day War—to capture over 120 mcf/d of associated gas and deliver it to the NGL 3100 facility, and to inject the dry, sweet gas output from this plant into the regional grid of Ilam Province via a newly established connection. In this way, we supplied approximately 3 mcm/d of dry gas to Ilam Province. Regarding feedstock supply for petrochemical plants, following damage to some of the Mahshahr petrochemical facilities during the 40-Day War, we are fully prepared to supply their required feedstock whenever needed. This is because both the Cheshmeh Khosh and Dehloran compressor stations may once again be brought back into full operational service, sending all associated petroleum gases to the NGL 3100 unit. Overall, all these projects will enable ICOFC to recover and return to the country’s energy portfolio between 3 mcm/d and 4 mcm/d of APG that would otherwise be flared. Furthermore, the project for capturing and managing flare gas from the Sarvestan and Saadatabad fields is another initiative, carried out with private-sector investment. The related facilities have been designed, procured, and constructed, and are currently being installed. We expect to see this flare gas capturing project at Sarvestan and Saadatabad commissioned within the current year.

In April 2025, at a conference introducing investment opportunities, packages were announced by ICOFC to potential investors. What is the current status of investor participation in the company’s projects?

Of our overall project portfolio that needs to be developed through investment, investors for the Madar, Gordan, and Pazan fields have already been identified. Executive work is currently underway at the Gordan and Pazan fields. For the Madar field, we are in the process of negotiations and obtaining permits from the Department of Environment (DOE) to commence construction operations, while the remaining fields are in various stages of contractual negotiations. The April 2025 conference was a very good opportunity for us to introduce field development projects and plans. However, less than a month later, the 12-Day War broke out, followed by restrictions arising from the activation of the snapback mechanism and tensions that ultimately led to the 40-Day War. Nevertheless, due to its inherent mission, ICOFC could not afford to wait to launch its projects. By completing the development operations at the Dey, Tous, and Khartang gas fields, the company achieved an excellent record in terms of both implementation time and production output. We have always welcomed investor participation and are keen to increase the private sector’s share in activities that lead to oil and gas production in the country. I hope that in the conditions and atmosphere that emerge after the war, we will see the entry of foreign investors. Given the memorandum of understanding (MOU) signed between Iran and the United States on June 18, we are hopeful that there will be relaxations in financial transfers, interbank transactions, and other international interactions. This would facilitate our operational processes in the development of oil and gas fields. With the lifting of the naval blockade, the challenges faced by contractors and partner companies in importing goods, materials, and equipment that are not domestically

produced will also be resolved. Furthermore, with the removal of these restrictions and export challenges, we may also play a significant role in the export arena. Gas production will certainly increase according to the plans that have been made, and consequently, liquids and gas condensates—which are by-products of gas production—will also rise, and God willing, we will be able to take further steps toward supplying feedstock for oil and gas refineries.

If foreign investors and contractors are attracted, what will be the models of cooperation and contracts with these companies?

If we look at the contracts from an external perspective—outside the oil industry—investors show greater interest in IPC models for field development. However, the models we have, include EPCF, IPC, BOT, and BOO. In fact, we have a variety of investment models, each with different risk factors. The final decision regarding which fields are assigned under which investment model rests with NIOC as a whole. Nevertheless, whatever form is determined and whatever investment contracts are concluded, we as NIOC’s representative are prepared, to fulfill all our professional duties and responsibilities and to execute the contracts. Regarding the possibility of investors from other countries entering, decision-making falls under the purview of the overall policies of the system and the government. In any case, we are the implementers of the decisions made at the level of the Ministry of Petroleum and NIOC.

What is the estimated investment required for the projects?

In general, the initial investment absorption capacity for the projects of ICOFC is estimated at $10 billion.

What will be the incentives and attractions of the projects for investors?

As the Minister of Petroleum also announced at the April 2025 investment event, one of the factors that will make investment attractive is that the rate of return on investment for gas field development has been raised from the average of 17-18% to about 20%, and for a number of gas fields, even higher figures have been agreed upon. Another factor is investment in flare gas capture, which may significantly reduce the associated petroleum gas flaring rate and, in some cases, bring it down to zero. Another aspect of investment attractiveness under IPC contracts relates to operations and production. During the operations and production phase, one of the important factors is the Production Fee, which is negotiated and agreed upon between the employer and the investor as part of the investment discussions.

What criteria turn a foreign company into a suitable partner for cooperation with ICOFC?

The criteria that exist fall into two categories: technical-executive capability and financial eligibility, both of which are assessed by NIOC and ICOFC. In practice, after companies declare their readiness, they are introduced to us through NIOC, and we then review their track record and technical capability. Financial capability is also evaluated by the Investment Directorate of NIOC and other relevant directorates. Ultimately, once both technical and financial capabilities have been final approved, we receive the companies’ technical proposals and enter into financial and contractual negotiations with them.

What are the company’s most critical technological needs, and what is your plan to achieve them?

Among the technologies, we have defined the project for smartification and intelligent management of oil and gas fields and reserves in collaboration with the Research and Technology Directorate of NIOC. Of course, for the implementation of this project, due to its importance, we did not wait for investment. In some fields, we also need to carry out projects such as hydraulic fracturing (to enhance oil and gas production from low-permeability reservoirs), where the entry of investors and the private sector is essential, because this requires specific designs and equipment, as well as a comprehensive and detailed upstream study to ultimately arrive at a reservoir fracturing plan. Therefore, in the upstream oil and gas development sector, we have no issues with surface-level execution operations—as evidenced by the fact that we developed three gas fields in less than about two years. However, in reservoir-related matters and technologies that lead to enhanced recovery from the reservoir, we need to design a model for hydraulic fracturing. This is one of the areas where investors can enter and negotiate on our candidate fields.

What is the advantage of investing in ICOFC projects?

One of the major advantages of ICOFC, according to those who have partnered and cooperated with us, is its agility, quick decision-making, and responsiveness. In any case, the contractors and companies working with us also simultaneously handle contracts with other companies, and they have repeatedly expressed satisfaction with the level of responsiveness, interaction, and speed of action at ICOFC. Our company’s strength lies in its agility—as we have already proven by developing three gas fields in less than two years. Therefore, it is essential that we focus on further enhancing this strength.

Investment in Postwar Oil/Gas Industry Reconstruction

Mostafa Basirian

Senior Expert, Investment in Upstream Oil & Gas Projects

In the wake of the Ramadan War of 2026, Iran’s vital oil and gas facilities were hit by massive air and missile strikes, causing extensive damage to production, refining, transmission, and export infrastructure. The scale of destruction is such that rebuilding the industry is not merely an economic necessity but a precondition for restoring Iran’s standing in global energy markets. Historical experiences of post-war reconstruction in countries such as Japan, Germany, Kuwait, and Iraq demonstrate that success in this endeavor requires a smart financial architecture capable of channeling domestic and foreign capital toward priority projects.

Analyzing the damage inflicted on Iran’s oil and gas industry, reviewing global experiences, and assessing domestic capacities, this article proposes a four-dimensional framework for financing the reconstruction: targeted mobilization of internal resources; a sovereign energy-backed cryptocurrency; hybrid financial instruments and public-private partnerships; and the creation of a suitable legal and geopolitical environment. Finally, it outlines Iran’s enduring advantages in attracting investment compared to its regional rivals.

Targeted Destruction

In 2026, during a five-week military campaign, the United States and Zionist Regime bombed more than 17,000 targets across Iran. A significant portion of these strikes, specifically and systematically, targeted oil and gas infrastructures.

The damage is not limited to physical destruction. Simultaneous attacks on upstream industries that supply equipment—such as steel and cement plants—have also disrupted the reconstruction supply chain. As a result, the cost of rebuilding and modernizing Iran’s oil and gas industry is estimated at well over several hundred billion dollars. All this while economic sanctions continue to block Iran’s access to international financial markets, the global banking system, and foreign investors. Thus, the central question facing policymakers is this: “How can the capital needed to rebuild the backbone of Iran’s economy be mobilized amid wartime devastation and the stranglehold of sanctions?” Answering this question requires three simultaneous moves: learning lessons from history, conducting a precise assessment of the damage and reconstruction requirements, and designing innovative financial instruments tailored to Iran’s unique circumstances.

Postwar Reconstruction Experiences

The history of global warfare offers numerous examples of energy infrastructure destruction and subsequent reconstruction. Examining these experiences reveals patterns of success and failure that could serve as guiding lights for Iran.

Japan: Reconstruction Relying on National Savings (1946–1952)

Japan’s heavy industries and energy infrastructure were severely damaged after World War II. Yet the country’s great innovation in financing reconstruction—rather than relying solely on US foreign aid—came through the creation of the Fiscal Investment and Loan Program (FILP). Known as the government’s “second budget,” FILP pooled small-scale household savings through 23,600 post offices and channeled them via specialized institutions into strategic projects, including power plants, refineries, and energy transmission networks. The system’s distinguishing feature was its “repayability” and “financial self-sustainability,” keeping resources circulating in a durable cycle.

Germany: Energy as a Driver of Integration (1949 onward)

The Marshall Plan for rebuilding West Germany not only provided $9.3 billion in resources but also laid the foundations for European economic integration. In the energy sector, Germany succeeded in attracting substantial foreign investment by linking the reconstruction of its oil and gas facilities to the common European market, turning itself into the continent’s industrial powerhouse. Iran, too, could tie the reconstruction of its energy infrastructure to regional energy corridors and major consumer markets.

Kuwait: Extinguishing the Flames and Rapid Recovery (1991)

During the Saddam withdrawal from Kuwait in 1991, more than 732 oil wells were set ablaze, and the country’s oil facilities were severely destroyed. Yet Kuwait managed to cap all the wells and restore production to pre-war levels in less than eight months. The factors behind Kuwait’s success included reliance on a national foreign exchange reserve fund as a stable financial source, the use of international project management (service companies), and the presence of a strong government capable of rapid decision-making.

Iraq: Money Without Institutions Goes to Waste (2003–2006)

After the US-led invasion of Iraq in 2003, Washington provided roughly $28.9 billion in aid, a large portion of which was allocated to rebuilding oil and gas infrastructure. However, widespread insecurity, corruption, and the lack of an effective institutional framework meant that most of those resources were squandered, and Iraq’s oil production did not return to pre-war levels for years.

Table 1: Key Reconstruction Lessons for Iran

Country	Primary Financing Mechanism	Key Lesson for Iran
Japan	FILP (mobilization of national savings)	A transparent and sustainable domestic financial architecture can substitute for external sources
Germany	Marshall Plan + European integration	Link reconstruction to regional energy markets
Kuwait	National reserve fund + international management	Speed, global expertise, and strong financial backing
Iraq	Foreign aid without an institutional framework	Without transparent institutions, injecting money is futile

Reconstruction Requirements

To design a realistic reconstruction program, one must first understand the precise nature and scale of the damage inflicted, and then define the reconstruction requirements accordingly. In the Ramadan War, the attacks can be divided into three categories:

Upstream: Production facilities at the South Pars gas field—the world’s largest gas reservoir—along with some crude oil processing facilities, have been damaged.

Midstream: Crude oil and natural gas transmission pipelines, pressure booster stations, and storage facilities in certain areas have sustained damage.

Downstream: Oil refineries and petrochemical complexes have been targeted.

Given the damage inflicted on facilities, the reconstruction of Iran’s oil and gas industry carries specific requirements:

Massive scale and long payback period: Rebuilding a refinery or processing facility requires millions of dollars in capital, and the return on that investment may take at least five years. This characteristic makes it essential to attract “patient capital.”

Urgency in restoring export capacity: Reconstructing export terminals (Kharg, Jask) must be the top priority.

Access to advanced technology and equipment: Many of the destroyed facilities were built with cutting-edge technologies, and replacing them requires cooperation with international oil service companies and equipment suppliers.

Management of geopolitical and security risks: Guarantee and insurance mechanisms must be calibrated to the post-conflict environment.

Financing Methods

Drawing on global experiences and Iran’s specific requirements, four parallel and complementary financing pathways for reconstruction are proposed:

An Energy Reconstruction Fund, Inspired by Japan’s FILP

The first step is the targeted mobilization of domestic resources through the creation of an “Oil and Gas Industry Reconstruction Fund.” This fund could be fed from multiple sources: a portion of liquid assets from National Development Fund of Iran (NDFI), special levies on oil and gas exports, and small-scale household savings. The fund must operate under independent auditing, with loan repayment obligations to ensure sustainability, channeling resources through specialized institutions into priority projects. Incorporating a sunset clause from the outset would prevent it from becoming an inflated and inefficient bureaucracy.

A Sovereign Energy-Backed Cryptocurrency: Turning Reserves into Digital Trust

The second innovative pathway involves using blockchain technology to tokenize oil and gas reserves and issue a sovereign energy-backed stablecoin. Kyrgyzstan’s successful experience with the USDKG stablecoin—fully backed by physical gold, subject to international auditing, and issued on the Tron network—demonstrated that a physical asset can be transformed into a globally tradable digital instrument. For Iran, the backing for such a cryptocurrency could be proven natural gas reserves from the South Pars field or recoverable gas condensates. This instrument offers several key advantages: relative resistance to tracking and blocking by sanctions-enforcing countries; the ability to attract liquidity from global cryptocurrency markets that are not confined by national borders; and the inherent transparency of blockchain, which enhances investor confidence. Accepting such a token as a valid currency on Iran’s energy exchange and in trade transactions with partners such as China and Russia could create a parallel financial market for reconstruction.

Hybrid Financial Instruments and Public-Private Partnerships

Given the high risk of investing under wartime and sanctions conditions, hybrid instruments for risk-sharing are essential:

- Guarantee funds: Establishing a fund with initial government seed capital to act as a first-loss layer, reducing risk for private investors.

- Reconstruction bonds for overseas Iranians: Issuing government-backed bonds with attractive interest rates to attract capital from Iranians living abroad—an instrument that operates outside the reach of sanctions.

- BOT and BLT contracts: Transferring the reconstruction and operation of a refinery or pipeline to private consortia (domestic or foreign) for a specified period, with guaranteed product purchase.

A Special Energy Financial Zone and Economic Diplomacy

Establishing a Special Financial Energy Zone in areas such as Assaluyeh or Jask, with modern commercial laws, tax exemptions, international arbitration, and investment guarantees, could provide a secure legal environment for foreign investors. The successful model of Kazakhstan’s Astana International Financial Center (AIFC) demonstrates that even in high-risk environments, a transparent legal framework may attract investor confidence. Concurrently, active diplomacy aimed at the phased easing of sanctions and de-escalation of tensions would be the single most powerful lever for reopening formal channels of foreign financing.

Enduring Appeal for Oil and Gas Investment

Despite wartime devastation and crippling sanctions, Iran retains fundamental competitive advantages that make it a uniquely attractive destination for energy sector investment. Unlike infrastructure, these advantages cannot be destroyed by bombs or missiles.

World Largest Combined Hydrocarbon Reserves

With over 158 billion barrels of proven oil reserves (third in the world) and 33 tcm of gas reserves (second in the world), Iran holds the largest combined hydrocarbon reserves on the planet. These vast reserves—particularly in shared fields—provide long-term assurance of investment returns.

Exceptionally Low Extraction Costs

The average cost of producing a barrel of oil from Iran’s onshore fields ranges between $7 and $10. By comparison, US shale oil costs $40–60 per barrel, and deepwater projects exceed $30 per barrel. This massive cost gap guarantees investor profit margins even under the most pessimistic oil price scenarios.

Large and Growing Domestic Market

With an 85-million-strong population and a developing industrial base, Iran offers a substantial domestic market for natural gas, refined products, and petrochemicals. Unlike exports, this market is less exposed to sanctions and international tensions, providing more stable cash flows for reconstruction projects.

Unmatched Geostrategic Location

Iran sits at the crossroads of north-south and east-west energy corridors, positioning it to become a regional hub for energy transit and swapping. Access to the open waters of the Persian Gulf and the Gulf of Oman, a land border with 15 countries, and an extensive pipeline network make Iran an unparalleled option for delivering energy to the thirsty markets of Asia, Europe, and the Indian subcontinent.

Skilled Human Capital and Recoverable Industrial Infrastructure

Iran possesses one of the largest pools of skilled oil and gas labor in the region. The country’s universities graduate thousands of engineers and specialists annually, ready to participate in reconstruction. Moreover, the existing industrial infrastructure represents a valuable foundation—rebuilding it is far less costly than building from scratch. This skeleton can serve as Iran’s non-cash contribution to joint investment projects.

Proposed Roadmap

Iran’s oil and gas industry, despite all the damage it sustained in the Ramadan War, is not only recoverable, but also can become the engine driving the reconstruction of the entire country. Global experience confirms that success on this path rests on three pillars: sufficient financial resources, access to technology, and a transparent institutional architecture.

The proposed roadmap is structured in three phases:

Phase One: Emergency Reconstruction (6–12 months)

- Prioritize critical projects

- Establish an “Energy Reconstruction Fund” with initial capital drawn from liquid assets of NDFI

- Pilot an “energy cryptocurrency” backed by South Pars gas condensates, with limited initial offering on the energy exchange

Phase Two: Structural Reconstruction (1–3 years)

- Create a “Special Financial Energy Zone” in Assaluyeh and Jask, featuring modern commercial laws and international arbitration

- Issue reconstruction bonds for Iranians abroad

- Sign BOT contracts with foreign companies for refinery reconstruction

- Gradually expand the energy cryptocurrency and accept it in bilateral trade with strategic partners

Phase Three: Long-Term Recovery and Revival (3–7 years)

- Link reconstruction to regional energy corridors

- Attract non-sanctioned international investors through guarantee mechanisms and hybrid financing

- Complete the legal framework for public-private partnerships and establish Iran as the Middle East’s energy hub

Conclusion

The experiences of various countries in post-war reconstruction, combined with innovative financing methods and diverse financial instruments, present a substantial opportunity for investment in Iran’s oil and gas industry to repair war damage and revive the sector. If Iran can link its unparalleled energy reserves with modern financial technologies and build a legal framework in which “promises” are translated into “enforceable guarantees,” then not only will the wounds of war heal, but Iran’s oil and gas industry will become the engine of national development and an irreplaceable player in global energy markets.

New Horizon for Iran Petroleum Industry

Omid Shakeri

Deputy Minister of Petroleum for Engineering, Research and Technology

Over the past decade, Iran’s oil and gas industry, facing tough international sanctions and restricted access to technology, has adopted a fundamental approach of “transitioning from technology consumption to technology generation.” The ultimate goal of this transformation was to achieve self-sufficiency in supplying critical equipment and services, thereby ensuring the continuity of production and the development of national infrastructure. This difficult but essential path has led to the formation of a comprehensive and integrated value chain in the oil industry, which today makes it possible to transfer this knowhow, experience, and expertise to target markets in neighboring countries.

Strategically speaking, the Office of Deputy Minister of Petroleum for Engineering, Research and Technology maintains that exporting technical and engineering services is, in essence, the export of “intellectual and managerial capital.” Unlike the export of raw materials, which is subject to sharp fluctuations in global prices, this type of export generates greater economic stability and strategic influence. In fact, when Iran designs and builds the industrial infrastructure of a neighboring country, it establishes a “technological and long-term linkage” that endures for many years through after-sales services, parts supply, and technical upgrades.

1. Operational Potential in EPC, E&P

Iran’s current capabilities in the field of engineering services are the result of the convergence of two fundamental pillars: “focused research in technology centers and universities” and “practical experience in managing complex fields.” This convergence has led to the creation of flexible execution models capable of adapting to the diverse needs of regional markets.

• EPC Model from Conceptual Engineering to Operation

The existing capacities in Iran’s oil industry enable the implementation of turnkey projects in compliance with the most stringent global standards such as API, ASME, and ISO. The country’s capabilities across various engineering phases—from conceptual design and basic engineering to detailed engineering and supply chain management—are such that they can significantly reduce execution costs without compromising technical quality or safety standards.

This expertise in constructing refineries, petrochemical complexes, gas gathering centers, and vast oil and gas transmission networks could be offered as a “comprehensive industrial package.” In this model, with over 2,500 manufacturers supplying goods needed by the oil and gas industry, approximately 153 first-tier contractors, and 34 EPC (Engineering, Procurement, and Construction) contractors boasting years of experience in carrying out major industrial projects, Iran not only acts as a builder but also serves as a senior consultant in optimizing the production processes of neighboring countries.

Oil Fields Optimization and Comprehensive Management Model

In the upstream sector, Iran’s expertise in managing reservoirs with geological characteristics and pressure conditions similar to those in regional fields represents a distinct competitive advantage. The services provided by Iran’s 21 Exploration and Production (E&P) companies encompass a complete chain of seismic studies, reservoir modeling, complex drilling, and production optimization, enabling them to carry out exploration, development, and crude oil and gas production activities in an integrated manner. This capability makes it possible to offer comprehensive services in neighboring countries, particularly in “production operations management.” Transferring this knowhow to regional countries means enhancing their resource extraction efficiency, while simultaneously creating strategic linkages in the energy sector, thereby ensuring regional energy security within a framework of mutual cooperation.

2. Iran Industrial Ecosystem Structure Analysis: Integrated Supply Chain

Iran’s industrial structure is formed as a connected pyramid, ranging from management companies down to equipment manufacturers. This structure has created a “support network” in which each level plays a key role in the realization of export projects.

Level I: Project Management and EPC Companies

At the top of this structure are leading EPC and E&P companies, which are responsible for overall project management, capital attraction, and the systematic coordination of all execution phases. These companies possess the ability to manage risks in international environments and act as the primary interface between the client and the supply chain. They are entrusted with undertaking major project commitments at the international level and ensuring timely delivery in compliance with standards.

Level II: Specialized Contractors and Consulting Engineers

In the middle layer, a vast network of consulting engineering companies and specialized contractors is active. These organizations specialize in areas such as industrial piping, installation of static and rotating mechanical equipment, control systems, automation, and instrumentation. This segment constitutes the “operational capacities” of the industry. The expertise of these companies in executing technical operations in harsh environments and diverse climatic conditions across the region ensures project continuity when facing environmental challenges.

Level III: Equipment Manufacturers and Suppliers

At the base of this structure are thousands of active manufacturing and industrial units. This ecosystem includes manufacturers of static equipment (such as pressure vessels and heat exchangers), rotating equipment (industrial pumps and compressors), and instrumentation equipment. The transformation of these manufacturers into “export suppliers” is the foundation for the success of EPC projects abroad. When domestic equipment has been tested and validated in massive national projects, the risk of its acceptance by an international client is significantly reduced.

1. Analysis of Regional Opportunities and Strategic Competitive Advantages

Target markets in neighboring countries, due to the need to renovate aging infrastructure and develop new fields, require technical partners that possess not only engineering knowledge but also a sound understanding of regional conditions. In this context, Iran has three key competitive advantages:

➢ Logistical Efficiency: Geographic proximity leads to a significant reduction in the transportation costs of heavy equipment and facilitates the movement of specialized personnel.

➢ Cultural and Climatic Affinity: Environmental and cultural similarities facilitate workforce management and managerial interactions, while minimizing communication risks in projects.

➢ Operational Reliability under Harsh Conditions: The ability to execute projects under sanctions constitutes a “living document” of Iran’s capability in crisis management and the provision of technical alternatives. This resilience experience has created some sort of “operational trust” that Western companies do not necessarily possess when facing political risks or sudden contractual changes.

2. Transition Toward Private Sector Centrality and Proposed Approaches

Given the dynamism of international markets and the need for flexibility in business negotiations, it is proposed that the execution of industrial development programs in neighboring countries be shifted from government-led models to the “private sector” and “specialized institutions.” In this new paradigm, the government appears in the role of facilitator and supporter, while the private sector acts as the executor and marketer. To activate these potentials, the following strategies are proposed:

• Formation of specialized export consortia: It is proposed that EPC companies and equipment manufacturers pool their expertise within organized consortia. This approach enables them to participate in major regional tenders with a “unified identity,” backed by comprehensive financial and technical guarantees, while distributing the financial risks of the project among several companies.

• Driving role of specialized associations and chambers of commerce: Private sector associations can play a key role in identifying hidden opportunities in target markets, aligning domestic standards with local standards of destination countries, and facilitating business negotiations. These institutions can act as a “bridge” between domestic manufacturers and foreign clients.

• Development of after-sales service networks by the private sector: Establishing technical and logistical offices in neighboring countries by private companies will guarantee the quality and sustainability of exported equipment. This physical presence conveys a sense of complete security to the international client and prevents them from turning to expensive global brands due to concerns about after-sales service.

• Supporting knowledge-based companies in exporting solutions: Knowledge-based companies are proposed to offer innovative solutions (such as energy consumption optimization systems or industrial automation) in the form of “knowledge exports.” This elevates Iran’s position from an equipment supplier to an “industrial architect” that defines the technical standards of the region.

3. Future Outlook

Iran’s oil and gas industry today stands at a pivotal juncture. Extensive localization and experience in managing megaprojects have provided the required foundation for the country to become a hub for technical and engineering services in the region. Becoming the axis of industrial development for neighboring countries requires a comprehensive approach in which the synergy between political diplomacy and industrial capability is fully realized.

Ultimately, this path not only leads to economic growth and enhanced productivity for domestic companies but also, by creating the technical and industrial dependence of regional countries on Iranian technology, establishes strategic and sustainable linkages. Relying on its expertise, technical integrity, and proper organization of the private sector, Iran is capable of reclaiming its position as one of the main drivers of the energy industry on a global scale and assuming the role of the “regional industrial architect.”

From Risk Premium to Investment Premium:

Mideast Normalization and Oil and Gas Investment in Persian Gulf

Afshin Javan

Energy Economist & Senior Strategic Advisor

Scenario	Core assumption	2045 investment flow	Interpretation
Low case	Partial normalization and recurring disruptions	$320 bn/year	Recovery remains constrained by risk premium
Medium case	Durable stability and gradual confidence repair	$510 bn/year	Stability supports broad investment revival
High case	Deep normalization and strong regional cooperation	$720 bn/year	Stability becomes a major investment multiplier

The Persian Gulf remains one of the most decisive energy regions in the world economy. Its importance is not limited to the volume of oil and gas resources under the ground. It is also shaped by export routes, shipping security, project finance, sovereign credibility, regional diplomacy, insurance costs, technology access and the ability of governments and national oil companies to execute large projects over long time horizons. This report examines how a return to stability after an eight-month political tension could affect oil and gas investment flows in the Persian Gulf region. It reviews historical investment conditions from 2000 to 2025 and develops low, medium and high scenarios to 2045. The central argument is that normalization may transform the investment environment by moving the region from a risk-premium cycle to an investment-premium cycle. In periods of tension, capital does not necessarily disappear, but it becomes more defensive, more expensive and more selective. Projects are delayed, financing terms tighten, insurance premiums increase and investors demand higher returns. In a credible stability scenario, the opposite mechanism can emerge: lower perceived risk improves bankability, restores project pipelines and allows long-cycle upstream, LNG, midstream, refining, petrochemical and energy-transition projects to move forward.

A Region Where Geology Meets Geopolitics

The Persian Gulf has long been described through the language of reserves, production capacity and strategic chokepoints. Yet the investment story is broader. Oil and gas capital does not flow only to places with resources. It flows to places where resources can be developed, financed, insured, transported and monetized. The region has enormous geological advantages, including low cost per barrel and large associated and non-associated gas resources. However, these advantages are repeatedly tested by geopolitical shocks. Political risk can turn a technically attractive project into a financially uncertain project. A field development with strong reservoir economics may still be postponed if the export route is exposed, if sanctions risk is unclear, if insurance costs jump, or if lenders apply a higher discount rate. This is why normalization matters. It does not create hydrocarbons; it changes the risk-adjusted value of existing opportunities.

Historical Investment Context: 2000-2025

From 2000 to 2025, the Persian Gulf oil and gas investment environment moved through several distinct phases. The early 2000s was supported by rapid Asian demand growth, rising oil prices and a renewed focus on capacity expansion. Persian Gulf producers invested in upstream capacity, refining, petrochemicals, export terminals and gas-processing infrastructure. The 2008 global financial crisis temporarily reduced financial confidence, but the region recovered faster than many higher-cost basins because of its lower lifting costs and strong state-backed investment capacity. The 2010-2014 period brought another wave of confidence as oil prices remained high and governments viewed energy investment as part of national development strategy. The 2014-2016 oil price collapse changed the tone. Companies and governments shifted toward capital discipline, efficiency, phased development and more rigorous project screening. The COVID-19 pandemic in 2020 created a deeper shock. Demand destruction, mobility restrictions and uncertainty around the speed of recovery delayed investment decisions. The post-pandemic rebound restored attention to energy security, particularly after the Russia-Ukraine tension. Energy-importing economies rediscovered the strategic importance of reliable oil, gas and LNG supply. By 2024 and 2025; however, renewed Middle East tensions again reminded investors that security risk could quickly reshape capital allocation.

The Eight-Month Tension Period

The report framework treats the eight-month political tension period as a negative shock to investment confidence. The shock does not imply that all projects stop. Large national projects often continue, especially when governments treat them as strategic priorities. But the marginal investment decision becomes harder. Final investment decisions can be delayed. International partners may wait for political clarity. Service companies may price in additional risk. Marine insurers may raise premiums. Banks and institutional investors may demand higher compensation for uncertainty. Engineering, procurement and construction schedules may be revised. In the analytical index used for this report, regional oil and gas investment flows rise from an estimated 74 in 2000 to around 260 by 2023, then soften to about 245 in 2024 and fall to about 205 in 2025 during the tension-adjusted period. These figures are not presented as official statistical totals. They are scenario-based analytical estimates designed to represent broad investment confidence across upstream, midstream, LNG, downstream and enabling infrastructure.

Risk Before and After Normalization

The report uses a risk index to capture the investment environment. A lower score means a more favorable investment climate; a higher score means elevated risk. The risk index rises during the tension period, reaching around 76, reflecting political uncertainty, possible disruption to shipping routes, higher insurance costs and potential delay in long-cycle project execution. After normalization, the risk index is assumed to decline toward 38, indicating a return of confidence. This matters because risk is embedded

in almost every financial calculation. It affects the cost of debt, equity-return expectations, insurance terms, contracting decisions, project schedules and the willingness of technology providers to engage. When risk declines, the same project can look more attractive without any change in the physical reservoir. A lower discount rate increases the present value of future cash flows. In this sense, stability behaves like a financial asset. It improves the economic value of projects by reducing uncertainty.

Normalization as an Economic Multiplier

Normalization should not be  just understood as a symbolic political event. In energy markets, it can function as an economic multiplier. It strengthens confidence that infrastructure will remain available, that export routes will remain open, that contracts will be honored and that long-term projects will not be repeatedly interrupted by political shocks. For the Persian Gulf, this is especially important because many energy investments are capital intensive and long lived. Offshore gas developments, LNG trains, pipelines, carbon capture networks, blue hydrogen projects, refinery upgrades and petrochemical complexes require long planning horizons. Investors must believe that the political and commercial environment will remain sufficiently stable for decades, not only months. The more credible the normalization process, the stronger the investment response can be.

Low, Medium and High Scenarios to 2045

The report develops three scenarios for 2025 to 2045. The low case assumes partial normalization, periodic political disruptions and cautious investor behavior. In this scenario, investment flows recover but remain constrained, reaching around $320 billion per year by 2045 in real 2024 terms. The medium or base case assumes a more durable stability environment. It allows delayed projects to restart, improves financing conditions and supports broader investment in oil, gas, LNG, petrochemicals and energy infrastructure. Under this pathway, by 2045 investment flows reach around $510 billion per year. The high case assumes deeper normalization, stronger regional cooperation, lower security risk, improved capital-market access and more integrated investment strategies across hydrocarbons, power, hydrogen, carbon management and industrial infrastructure. In this scenario, annual investment flows could reach around $720 billion by 2045.

Comparison with Major Outlooks

The scenarios are compared conceptually with OPEC, IEA, EIA, BP and Shell outlooks. These institutions do not produce identical forecasts because they start from different assumptions about oil demand, gas demand, electrification, climate policy, technology progress, population growth, economic development and the pace of the energy transition. OPEC’s long-term outlook tends to emphasize the continuing need for oil investment and the danger of underinvestment. IEA analysis gives greater attention to the redirection of global capital toward electricity systems, clean energy technologies and efficiency, while still recognizing that oil and gas investment remains significant. EIA projections often provide a reference case based on policy and market assumptions. BP and Shell scenarios are useful because they show how different transition pathways can produce very different hydrocarbon investment requirements. The comparison highlights a critical point: the Persian Gulf investment outlook is not determined by one forecast. It depends on the interaction between global demand uncertainty and regional risk.

Why the Base Case Must Be Interpreted Carefully

The base case in this report should not be read as a mechanical projection that oil and gas demand would expand without limits. It is better understood as a capital-flow scenario under conditions of improved stability. Even in a world of energy transition, investment does not disappear, its form changes. Oil investment becomes more selective, focused on lower-cost and lower-emission barrels. Gas investment becomes more strategic, particularly where gas supports power generation, industrial development, LNG exports and the replacement of higher-emission fuels. Downstream investment becomes more integrated with petrochemicals, logistics and product-market flexibility. New investment categories, including carbon capture, methane reduction, digital field management, blue hydrogen and low-carbon industrial clusters, become part of the broader energy-investment landscape. A stable Persian Gulf can attract capital across this full spectrum.

The Role of NOCs

National oil companies (NOCs) are central to the Persian Gulf investment story. They control major reserves, manage long-term capacity strategy and often act as both commercial companies and instruments of national development. During periods of tension, national oil companies may continue projects that international investors would delay because governments treat energy security and revenue stability as strategic priorities. However, even state-run companies face constraints. They require technology, equipment, financing, contractors, shipping, insurance and access to markets. Normalization can improve all these channels. It can also help NOCs form partnerships with international firms in areas such as enhanced oil recovery (EOR), LNG, offshore development, petrochemicals, carbon capture and digital transformation. The investment dividend of stability is therefore not limited to private capital; it also enhances the efficiency and ambition of state-led capital deployment.

Financing, Insurance and the Cost of Capital

The most immediate impact of political tension is often visible in the cost of capital and the cost of risk transfer. Investors require compensation for uncertainty. Banks may shorten maturities, raise

margins or demand stronger guarantees. Insurers may increase premiums for marine, construction, political-risk and business-interruption coverage. Contractors may include higher contingency margins in bids. These effects raise the all-in cost of projects. A normalization scenario can reverse part of this burden. Lower insurance costs, improved lender confidence and better access to international capital markets can make projects more viable. For long-cycle projects, small changes in financing assumptions can have large effects on net present value. This is why the financial consequences of stability can be larger than they first appear.

Infrastructure and Export Reliability

Investment flows also depend on confidence in infrastructure. The Persian Gulf is deeply connected to global markets through ports, pipelines, shipping lanes, LNG terminals, refineries and petrochemical hubs. Any perception that export routes may be disrupted increases the risk premium. Normalization improves the perceived reliability of trade routes and encourages investment in new capacity. It can support additional redundancy in export systems, more storage, more flexible routing, expanded gas processing, and upgrades to terminals and industrial corridors. Investors are more willing to finance infrastructure when they believe assets will be fully utilized and not stranded by repeated disruptions. This is especially relevant for LNG projects, where buyers and financiers require long-term certainty.

Seasonal and Operational Considerations

The investment cycle is also affected by seasonal and operational realities. Spring and autumn can be favorable periods for construction, maintenance and project mobilization in parts of the region. Summer brings peak energy demand and operational stress, particularly for electricity systems and cooling needs. Winter can create weather-related constraints and planning adjustments. These seasonal factors do not determine the long-term investment outlook, but they matter for project execution. In a high-tension environment, seasonal windows can be lost because contractors, lenders or governments delay decisions. In a stable environment, seasonal planning becomes more efficient, allowing projects to move through approval, procurement and construction with fewer interruptions.

Energy Transition and Persian Gulf

The energy transition creates both risk and opportunity for the Persian Gulf. On one hand, long-term oil demand uncertainty can reduce appetite for high-cost or high-emission projects. On the other hand, the region’s low-cost resource base can remain competitive if producers reduce emissions intensity and invest in operational efficiency. Natural gas, LNG, petrochemicals and low-carbon fuels may become more important within national strategies. Stability can help the region attract investment not only for traditional oil and gas, but also for transition-related infrastructure such as carbon capture, hydrogen, power integration, renewables linked to industrial clusters and low-emission refining. The most successful investment strategies will likely combine hydrocarbon competitiveness with credible transition positioning.

Investor Behavior After Stability Returns

Once a tension period ends, investors do not immediately forget risk. They watch whether normalization is durable. They look for diplomatic signals, maritime-security improvements, project approvals, contract enforcement, banking access and evidence that delayed projects are restarting. The investment recovery may therefore occur in stages. The first stage is confidence repair, where markets price lower risk but remain cautious. The second stage is project reactivation, where delayed investment decisions return to the pipeline. The third stage is expansion, where new projects are proposed because the stability environment appears durable. The high case in this report depends on reaching the third stage. The low case assumes the region remains trapped between the first and second stages.

Policy Implications

For governments in the region, the policy message is direct. Stability must be converted into bankable investment conditions. This requires credible regulation, transparent project structures, predictable fiscal terms, efficient permitting, strong local supply chains and realistic transition strategies. Governments should not assume that capital will arrive automatically because resources exist. Global capital is increasingly competitive. Energy investors can choose between oil, gas, LNG, power grids, renewables, critical minerals, storage, digital infrastructure and industrial decarbonization. The Persian Gulf has advantages, but it must translate them into investable opportunities. A credible normalization process can be one of the strongest tools for doing so.

Country-Level Sensitivities inside Persian Gulf

Although the report treats the Persian Gulf as a strategic investment region, the investment response to normalization would not be identical across countries. Saudi Arabia, the United Arab Emirates and Qatar enter a stability phase with strong balance sheets, established project-management systems and large existing energy platforms. Kuwait and Oman may benefit through more reliable regional trade, downstream integration and gas-related infrastructure. Iraq has large resource potential, but its investment response depends heavily on domestic political stability, contract structures, water availability, infrastructure bottlenecks and the credibility of project implementation. Iran represents a separate case because sanctions, financing restrictions and technology access strongly influence its investment outlook. In a broad regional

normalization scenario, Iran’s potential upside could be large, especially in gas, condensate, petrochemicals and field rehabilitation, but the scale of capital inflow would depend on the legal and financial architecture of normalization. Therefore, the high case assumes not only lower security risk, but also wider access to technology, finance and export markets.

Oil, Gas, LNG and Downstream Channels

The normalization dividend would work through several investment channels. In oil, it could support capacity maintenance, enhanced recovery and selective upstream expansion. In natural gas, it could unlock projects that require long-term offtake confidence, processing infrastructure and regional market integration. In LNG, stability is particularly important because projects depend on long contracts, buyer confidence and reliable shipping. In refining and petrochemicals, normalization can encourage investment in integrated complexes that capture value beyond crude exports. The downstream channel is important because Persian Gulf producers increasingly seek to move from simple export of raw hydrocarbons toward higher-value industrial products. Political stability can also improve the economics of storage, blending, trading and logistics hubs, especially where countries aim to become regional energy and commodity platforms. The investment story is therefore not only about producing more barrels. It is about enhancing the quality, flexibility and value-added content of the region’s energy system.

What Could Break the High Case

The high case is attractive but not guaranteed. It could be weakened by renewed military incidents, sanctions escalation, maritime insecurity, weak contract enforcement, project-cost inflation, shortages of skilled labor, delays in power and water infrastructure, or a faster-than-expected decline in global oil demand. It could also be weakened if investors view normalization as temporary rather than institutionalized. Energy investors distinguish between a ceasefire and a durable political settlement. They also distinguish between diplomatic language and operational reality. If project finance markets remain cautious, or if international companies fear reputational and transition-related risks, the investment response may be slower than expected. This is why the medium case is treated as the most balanced pathway. It assumes improved stability but does not assume the disappearance of all political and market risks.

How to Read Numbers

The numerical values used in the scenario tables should be read as real 2024 dollar investment-flow estimates for analytical comparison, not as audited expenditure statistics. Their purpose is to make the direction and scale of the normalization effect visible. The historical index translates broad changes in capital confidence into a consistent time series, while the forecast scenarios show how different assumptions about risk, cooperation and market access can alter the investment path. This approach is useful for policy analysis because it connects geopolitics with finance. It shows that the same global energy outlook can produce different regional investment outcomes depending on whether investors price the Persian Gulf as a disrupted region, a recovering region or a stable strategic platform.

Editorial Interpretation

The broader lesson learnt is that the Persian Gulf is entering a period in which investment competitiveness will be measured not only by reserves and production costs, but also by credibility. The region must compete with clean-energy investment, North American LNG, African gas, Latin American oil, Asian refining, European decarbonization infrastructure and global power-sector expansion. Capital is mobile, and investors compare opportunities across sectors. A stable Persian Gulf can remain one of the most attractive energy-investment destinations in the world, but only if it combines resource strength with lower political risk, clear policy signals and credible transition planning. Normalization can open the door, but execution determines whether capital actually enters.

Strategic Conclusion

The central conclusion is that normalization after an eight-month tension could significantly improve the oil and gas investment outlook for the Persian Gulf. The effect would not be limited to a short-term rebound. If stability is credible, it could lower the risk premium, reduce financing costs, revive delayed projects and support larger capital flows to 2045. Under the low case, investment recovers but remains constrained by recurring uncertainty. Under the medium case, stability supports a broad recovery and annual investment flows reach around $510 billion by 2045. Under the high case, deeper regional cooperation and stronger confidence could raise annual flows toward $720 billion. The Persian Gulf's future will not be determined only by geology. Geology creates opportunity, but stability unlocks capital. In the coming decades, the region's ability to transform political normalization into financial credibility may be as important as the reserves it holds underground.

Scenario Summary Table

Case	2025	2030	2035	2040	2045
Low case	210	140	200	260	320
Medium / base case	210	220	330	420	510
High case	210	300	420	560	720

 

Reconstruction, Renovation and Energy Security

Pooneh Torabi

Why can Iran grow into the Middle East’s biggest energy investment opportunity? Developments in recent months across the Middle East have once again demonstrated that energy security depends not merely on the volume of oil and gas reserves. In a world where economic growth is still shaped mainly by sustainable access to energy, the resilience of infrastructure, the ability to rebuild damaged capacity, and the speed with which production can return to supply have become just as important as the resources themselves.

The recent military tensions and direct confrontation between Iran and the United States - specifically the US and Zionist Regime attack on Iran that began on February 28, lasted forty days, and ended on June 16 following an MOU between Iran and the US - once again drawn global market attention to one of the most critical realities of the energy industry. These are energy infrastructure, including refineries, storage tanks, pipelines, and processing facilities, is vulnerable to geopolitical developments, and any disruption can affect the energy security of the region and the world.

Under such circumstances, Iran has entered a new phase. During the third imposed war, parts of Iran’s energy infrastructure sustained damage. However, even during the conflict, the reconstruction process of the infrastructure was carried out by the Ministry of Petroleum to ensure no disruption in Iran’s energy supply. As a result, Iran’s oil and gas industry now faces an opportunity that goes beyond merely restoring facilities to their previous condition. Global experience has shown that post-war and reconstruction periods often become the starting point for new waves of investment, technology transfer, and industrial modernization. Today, Iran’s energy industry stands on the threshold of such a phase.

From this perspective, Iran is not only one of the world’s largest oil and gas reserves holders; it has also become one of the most significant potential markets for the reconstruction and development of the energy industry in the Middle East. It is a market that can both help strengthen regional energy security and provide rare opportunities for international companies and investors.

Regional Energy Equation

In terms of hydrocarbon reserves, Iran ranks among the world’s major energy powers. With over 208 billion barrels of proven oil reserves - equivalent to about 12% of the world's oil reserves - Iran stands as one of the most significant oil-rich countries in the world. 

In the natural gas sector, Iran holds more than 33 tcm of proven reserves, making it one of the largest holders of gas resources globally. The presence of the massive South Pars field, the largest known gas field in the world, further amplifies Iran’s strategic importance in future energy equations. 

According to estimates by the Ministry of Petroleum, the country's total hydrocarbon reserves amount to over 1,200 billion barrels of oil equivalent. These figures not only reflect the volume of underground resources but also represent a capacity that could play a decisive role in meeting the energy needs of the region and the world in the coming decades.

While many of the world’s major oil and gas fields are experiencing natural production declines, and the development of new projects in some regions comes with high costs and increasing risks, Iran remains one of the few countries that simultaneously possesses vast resources, competitive production costs, and extensive undeveloped capacities.

This unique combination has made the reconstruction and development of Iran’s energy industry not merely a national project, but an issue directly linked to the future of regional energy security.

Infrastructure and Experience

What distinguishes Iran from many emerging energy markets is not merely the volume of its oil and gas reserves. Iran’s most significant advantage lies in the rare combination of vast energy resources, extensive infrastructure, and over a century of operational experience.

More than 115 years have passed since the discovery of oil in Masjed Soleyman - an event that marked the birth of the petroleum industry in the Middle East. Over this period, Iran has gained experience in developing hundreds of oil and gas fields, as well as constructing refineries, transmission pipelines, export terminals, and major petrochemical complexes.

Today, the country’s oil refining capacity stands at approximately 2.4 mb/d. Dozens of refineries, petrochemical complexes, processing facilities, and export terminals are operating across the country. More than 70 oil fields and over 20 gas fields are currently in production, and thousands of kilometers of oil and gas pipelines form the main arteries of the nation’s energy industry.

Iran’s petrochemical industry, with an annual nominal production capacity of nearly 100 million tonnes, is among the largest in the Middle East. Alongside this infrastructure, a vast network of contracting companies, equipment manufacturers, research centers, and tens of thousands of skilled professionals has been developed over decades of activity in the energy sector.

For this reason, the reconstruction of Iran’s energy industry - unlike in many countries affected by crisis - does not start from zero. The basic infrastructure, supply chains, specialized human resources, and technical knowledge already

exist, and this may significantly reduce both, the time and cost required to implement new projects.

Historic Opportunity

Reconstruction is typically defined as repairing damage, but in the context of Iran’s energy industry, the concept of reconstruction goes far beyond that.

Recent regional tensions have made the need to modernize parts of the infrastructure and enhance the resilience of the energy industry more evident than ever. At the same time, these circumstances have created an unprecedented opportunity to deploy new technologies, improve efficiency, digitize facilities, and redesign certain energy infrastructures.

Experience from various countries has shown that post-crisis periods often serve as launchpads for technological leaps. Iran, too, can use this phase to build a new generation of oil, gas, refining, and petrochemical infrastructure - infrastructure equipped with more advanced technologies, higher efficiency, and modern industrial standards.

From this perspective, the reconstruction of Iran’s energy industry is not merely a project to repair damage; it is a project to modernize and upgrade one of the world’s largest energy industries.

Energy Marketing

For international investors, the most attractive opportunities typically emerge where three factors exist simultaneously: abundant resources, existing infrastructure, and a need for capital and technology. Today, Iran possesses all three components.

A significant portion of the country’s oil fields are mature, and maintaining or increasing production from them requires advanced enhanced recovery technologies and constant investment. Even a few percentage points of improvement in the recovery factor from certain reservoirs could generate billions of barrels of new recoverable oil - a potential whose economic value rivals that of many major exploration projects worldwide.

Furthermore, the development of shared fields, associated petroleum gas (APG) gathering, refinery modernization, energy efficiency improvements, petrochemical value chain expansion, emissions reduction, the application of digital technologies in field management, and the development of both upstream and downstream projects are among the most important areas requiring capital and technology.

In this context, the Ministry of Petroleum, last calendar year (to 20 March 2026) and before the 12-Day War, introduced over 200 investment opportunities across various sectors of oil, gas, refining, and petrochemicals. Many of these projects offer considerable economic returns and could pave the way for broad participation by domestic and foreign investors. Now, in addition to these opportunities, the reconstruction of infrastructure damaged during the third imposed war has also become available to investors.

Minister of Petroleum Mohsen Paknejad has also emphasized that the development of Iran’s oil and gas industry requires leveraging capital and technology, and that the ministry has sought to create conditions for broader investor participation by designing new models.

Recent developments in the Middle East have once again demonstrated that energy security is a concept that goes beyond the volume of oil and gas reserves. Energy security depends on countries’ ability to protect, rebuild, and develop the infrastructure that ensures a stable flow of energy. In this context, Iran - with its vast hydrocarbon resources, extensive industrial infrastructure, privileged geopolitical position, and over a century of experience in the oil and gas industry - can play a decisive role in shaping the future of regional energy security.

Today, Iran’s energy industry stands at a threshold where reconstruction, modernization, and development are all taking place simultaneously. This process is not merely about compensating for damages caused by recent tensions; it is an opportunity to build a new generation of energy infrastructure using advanced technologies and innovative investments. From this perspective, Iran is not only one of the largest energy reconstruction markets in the Middle East but could also become one of the most important energy investment destinations over the next decade.

Iran’s role in this regard is not limited to its domestic capacities. The linkage between vast energy resources, technical and industrial expertise, and the country’s strategic location can contribute to the resilience of the region’s energy network. Furthermore, attracting modern capital and technology will enhance efficiency, infrastructure development, and regional cooperation - factors that all play an essential role in achieving sustainable energy security.

In a world that needs reliable and sustainable energy supplies more than ever before, the reconstruction of Iran’s energy industry can transcend a national project and become one of the most strategically significant energy projects in the Middle East. Success of the project will influence not only the future of Iran’s oil and gas industry but also the energy security equations of the region in the years ahead. This is because Iran is among the few countries that simultaneously possesses vast oil and gas reserves, access to open waters, a privileged transit position, and a large domestic market. Being located at the crossroads of the Persian Gulf, the Gulf of Oman, Central Asia, the Caucasus, and the Indian subcontinent has given Iran a unique position in the region’s energy equations.

Azar 2^nd Phase Development Starts Up

The project manager for the development of the Azar oil field has announced the successful completion and full commissioning of the first phase of the project.

Keyvan Yarahmadi said the commencement of the construction process for the second phase—aimed at boosting the production of this joint field to 22,000 b/d.

Yarahmadi noted that the second phase of development and exploitation of the Azar field was ratified in December 2025 and has been formally assigned to the contractor. He added that the budget and work program for 2026 have been approved to advance the project’s objectives.

He further noted that all documentation—including the contracting strategy, Work Breakdown Structure (WBS), Cost Breakdown Structure (CBS), chart of accounts, physical progress measurement guidelines (S-Curve), and the organizational chart—are currently undergoing finalization or expert review.

Elaborating on the operational status of the project, Yarahmadi explained that the groundwork for rig installation and the commencement of drilling operations for the first well of the second phase is currently in the tendering process, structured across 13 work packages. Some of these packages have already been finalized, while others are nearing completion.

Regarding the procurement of required equipment, Yarahmadi reported that a portion of the drilling equipment has been ordered and delivered, while another portion has been manufactured and is ready for shipment to the country and clearance through customs.

He also announced that two Electric Submersible Pump (ESP) sets have been ordered, with technical and inspection meetings (PIM) already held. According to contractual commitments, these units will be manufactured and delivered before the end of the current calendar year.

The Azar field development project manager identified the ultimate goal of these efforts as increasing extraction from the jointly-owned Azar field. He stated that plans are in place for the installation of two ESP sets and the deployment of an additional Mobile Offshore Pump (MOS) unit. Once implemented, these measures will raise the field’s production from its current level of approximately 18,500 b/d to 22,000 b/d by the end of the current calendar year.

Yarahmadi, however, also warned of the challenges facing the project, noting that the conditions arising from the recent imposed war have delayed the loading and shipping process for foreign goods.

He went on to say that the persistence of international tensions and force majeure events have further slowed the tendering process and development activities. Moreover, the prolonged approval procedures under the new Iran Petroleum Contracts (IPC) framework have added to the complexities of executing this strategic project.

Stressing that the project management team, despite these obstacles, is making every effort to minimize delays and achieve production targets, Yarahmadi clarified that the Azar oil field is located in the Anaran exploration block in Ilam Province, along the Iran–Iraq border. Approximately one-third of its reserves lie within Iranian territory, with the remainder situated in the neighboring country. The field is also characterized by one of the most challenging and complex geological structures in the region.

SP11 Rich Gas Output Totals 16.6 bcm

The project manager for the Phase 11 development of the South Pars gas field has announced cumulative production of 16.6 bcm of rich gas from this phase, saying the thermal value of the extracted gas is equivalent to approximately 100 million barrels of crude oil.

Noting that recovery from this phase has reached around 24 mcm/d since the commencement of rich gas production, Keyvan Tariqati said this output plays a vital role in securing the country’s energy supply, enhancing recovery from the jointly-owned South Pars field, and securing national interests.

He added that, in concurrence with the ongoing development plan for this phase, the initial flowback and acidizing operations for the 11^th well on Platform B of Phase 11 have been successfully completed. Once connected to the production platform, this well will gradually add approximately 2.3 to 2.5 mcm/d of rich gas to the phase’s production capacity, raising the platform’s rich gas output to around 26 mcm/d.

Tariqati went on to address the particular challenging operational conditions of recent months, noting that the project continued drilling operations until the very last possible moment during the third imposed war—despite operational constraints, disruptions to logistics routes, and heightened risks in the Persian Gulf.

He stressed that throughout all stages of activity, strict adherence to health, safety, and environmental (HSE) requirements and the implementation of directives issued by competent authorities remained the foremost priority in all decision-making and construction. This approach, he said, ensured the protection of both human capital and the project’s equipment and facilities.

Expressing gratitude for the efforts of the project’s specialists, he added that operational staff, experts, and support personnel demonstrated exceptional commitment and responsibility throughout this period, maintaining the project’s operational readiness and laying the groundwork for the swift resumption of activities under safe and stable conditions—an approach that marks a significant step toward ensuring gas production stability, particularly in the months ahead.

The Phase 11 development project—the last among the 24 phases of this massive field—has been awarded under the new (IPC) model.

The development of this border phase has been pursued with renewed momentum since the beginning of the 14^th Administration, with gas recovery rising from approximately 12 mcm/d by the end of August 2024 to over 24 mcm/d by January 2026, representing an increase of more than 100%.

Azadegan Output to Grow 40,000 b/d

Nasrollah Zarei, the CEO of Petroleum Engineering and Development Co. (PEDEC) has announced the start of construction work for the second development phase of the giant Azadegan oil field.

He said that this project ranks among the most significant development projects in Iran’s petroleum industry. Upon implementation, the first phase alone will increase the field’s production capacity by approximately 40,000 b/d.

Highlighting the strategic importance of the Azadegan field, Zarei noted that Azadegan is the largest shared oil field in Iran, and its development plays a decisive role in securing national interests, boosting production, and enhancing the reservoir’s recovery factor. For this reason, the implementation of the second phase of development has been prioritized within the company’s program.

He added that complementary studies, tendering processes, equipment procurement, and the acquisition of required permits are currently being carried out simultaneously to ensure that the project proceeds with maximum speed and precision.

Elaborating on the initial phase of the plan, he said that the installation of 40 Electric Submersible Pump (ESP) units, the workover of 10 production wells, and an extensive well stimulation project are among the most critical actions envisaged for this stage. Once implemented, these measures are expected to yield a production hike of approximately 40,000 b/d within an 18-month timeframe.

Zarei put the investment volume for this phase at roughly $550 million, adding that project financing will be secured through domestic capacities and collaboration with the country’s banking network.

He expressed the company’s commitment to maximizing the participation of Iranian contractors and manufacturers to bring the project online in the shortest possible time.

Referring to the deployment of new technologies in the project, he said: “For the first time on such a large scale, the use of artificial lift systems and ESP has been placed on the agenda at the Azadegan field. This initiative, beyond enhancing production, will play a crucial role in sustaining output and improving reservoir performance in the years ahead.”

Zarei further stressed that one of the core strategies in implementing this project is reliance on domestic technical and industrial capabilities. The majority of required equipment—including casing pipes, wellhead equipment, and numerous strategic items—will be supplied by Iranian manufacturers. This approach not only supports domestic production but also reduces foreign dependency and generates foreign currency savings.

Underscoring the importance of environmental compliance in project implementation, Zarei said that the proximity of the Azadegan field to the Hawizeh Marshes doubles the company’s responsibility.

As such, all operational activities will be carried out in strict adherence to environmental standards, employing cluster drilling methods, waste management protocols, and continuous environmental monitoring.

He recalled that the development of Azadegan is not merely a production-boosting project, rather than that it is an integral part of the country’s broader strategy for the optimal development of shared reservoirs and the enhancement of the national hydrocarbon recovery factor. Enhanced production and recovery at this field, he noted, will generate substantial economic value for the nation.

“With the commencement of the second phase development operations at Azadegan, a new chapter has begun in the development of West Karun fields. We are confident that by relying on the expertise of Iranian specialists, domestic capabilities, and the collaboration of contractors and manufacturers across the country, this project will become one of the oil industry’s success stories in the years to come,” said Zarei.

Reshadat Output Capacity to Rise 35,000 b/d

Ahmad Reza Rasti, the CEO of Iranian Offshore Oil Co. (IOOC) has announced the successful installation of the main platform for the Reshadat oil field development project—weighing 6,200 tonnes.

He said that upon completion of the project, the field’s production capacity will increase by 35,000 b/d, while simultaneously 80,000 barrels of water will be injected daily to maintain reservoir pressure and ensure sustainable production.

Referring to the company’s long-standing track record, he noted that IOOC has been responsible for oil production in the Persian Gulf for over six decades and is among the few companies possessing the full value chain of exploration, production, transmission, processing, storage, and export of oil.

Touching on the installation operations for the Reshadat field’s P4 platform, he said that this platform—part of the Reshadat field development project—was designed, constructed, transported, and installed at a weight of approximately 6,200 tonnes, with all stages carried out entirely by Iranian specialists.

Rasti added that one of the notable features of this platform is its four-pile design—whereas structures of this weight typically require a greater number of piles. Furthermore, the installation was carried out using the float-over method, which, although less costly than conventional techniques, demands exceptional precision and favorable sea conditions.

He explained that the operation was originally scheduled for March, but was postponed due to the conditions arising from the war. Fortunately, as soon as suitable conditions returned, the installation was successfully carried out.

He went on to say that the Reshadat field, like many of the Offshore Oil Company’s offshore fields, is water-drive in nature and requires water injection schemes to maintain reservoir pressure. For this reason, alongside production increases, daily injection of 80,000 barrels of water has been incorporated into the project plan.

Rasti stressed that the petroleum industry’s policy has been always to achieve maximum production capacity, with sustainable production pursued to guarantee output stability and enhance the recovery factor.

Regarding the timeline for full commissioning of the Reshadat development project, Rasti stated that five platforms are planned for this field, some of which have already been installed, while drilling operations continue.

He added that a total of 20 wells—including 10 injection wells—will be drilled as part of this project, with a significant portion of the drilling work already completed.

Rasti also referred to IOOC’s investment capacities, stating that over $5 billion investment opportunities have been defined across development projects in the Lavan, Resalat, Reshadat, and Salman fields alone.

He noted that a substantial portion of these projects is currently being executed under domestic contracts, while the company remains open to attracting new investment.

Rasti said despite the pressures of sanctions and currency fluctuations, domestic contractors are moving the projects forward. Total investment opportunities across these projects are estimated to exceed $5 billion. In addition, numerous development packages have been defined for undeveloped fields, ready to attract investors.

Crash Plan for Gas Output Hike

Minister of Petroleum Mohsen Paknejad has announced the implementation of a crash plan to enhance gas production in the onshore sector.

He said that by using up available capacities, the plan for boosting gas production—alongside field development and associated gas capture—is being pursued with accelerated momentum.

Paknejad emphasized that even during the 12-Day and 40-Day War, the petroleum industry’s activities across various sectors never came to a halt, and the development of oil and gas fields throughout the country continued with unwavering seriousness.

He added that beyond ongoing operations at the South Pars gas field and offshore platforms, an emergency production increase plan has also been defined and entered into the execution phase for the onshore sector.

Noting that this plan encompasses all fields under the jurisdiction of Iranian Central Oil Fields Company (ICOFC), he said: “Based on the planning undertaken, we will utilize all available capacities to enhance gas production, and we will see production growth across all fields.”

Paknejad also touched on the progress of associated petroleum gas (APG) gathering projects, saying: “These projects are being pursued with full seriousness, and currently 30 contracts for APG capture are under implementation.”

He went on to say that, according to the schedule, five APG capture projects are on the verge of commissioning. The implementation of these projects, while reducing flaring and improving environmental indicators, will enable the utilization of APG in the production sector and return these resources to the oil industry’s value-creation cycle.

On recent achievements of the oil industry, Paknejad said that over the past year and a half, several major APG capture projects have been implemented, and their execution—with the participation of the private sector—has gained significant momentum compared to previous periods and is now on a clear path of development.

NIDC and Universities Ink Onshore Rig MOU

A memorandum of understanding (MOU) for the construction of two heavy onshore drilling rigs with a capacity of 2,000 horsepower each—aimed at maximizing the utilization of domestic capabilities and capacities—was signed between National Iranian Drilling Co. (NIDC) and Academic Center for Education, Culture and Research (ACECR).

The signing ceremony took place at NIDC’s headquarters in Ahvaz, with the attendance of Morteza Fouladi, CEO of NIOC, Valiollah Roshan, ACECR’s representative for the Iran University of Science and Technology. and Hamid Reza Tayebi, a member of ACECR’s Board of Trustees.

Fouladi said: “Since its inception to the present day, NIDC has played a fundamental and pioneering role in the drilling of exploration, development-appraisal, and workover wells, as well as in the discovery of new fields across the country’s onshore and offshore oil-rich zones.”

Stressing that the company is regarded a parent specialized entity within the strategic drilling industry, he added that beyond fulfilling its role in drilling operations, NIDC also provides valuable integrated technical and engineering services related to this industry to active oil companies.

He went on to say that parallel to these activities, the training and development of specialized personnel—who today serve both within the company and in the private sector—also form a proud chapter in NIDC’s record of achievement.

Referring to the emphasis placed by the Minister of Petroleum and the CEO of National Iranian Oil Co. (NIOC) on strengthening, modernizing, and streamlining NIDC, as well as the allocation of funds for the reconstruction and renovation of the drilling fleet and specialized technical and support services, Fouladi said: “Accordingly, the maximum utilization of domestic capacities for the manufacture of practical parts, equipment, and drilling rigs has been placed on the agenda. Given the long history of cooperation with ACECR, it was decided that the institution’s expertise and facilities would be drawn upon in the construction of drilling rigs.”

Expressing his satisfaction with the continuation of cooperation with NIDC, Roshan said: “In line with our bilateral collaborations, this institution stands fully prepared to cooperate in meeting drilling needs in the areas of equipment manufacturing and rig construction, thereby contributing meaningfully to production sustainability.”

Meanwhile, Mojtaba Anvari, Director of the ACECR’s Drilling Rig Engineering and Construction Center, elaborated on the sidelines of the event on the technical specifications of the new drilling rig construction project. He recalled more than two decades of cooperation between ACECR and NIDC, noting that the construction of three heavy onshore drilling rigs—Fath 71, 72, and 73—as well as the manufacture of several Drilling SCR (Silicon Controlled Rectifier) control systems, are among the collaborative achievements between the two entities.

Regarding the construction of the two new drilling rigs, Anvari stated that these units are of the heavy type with a capacity of 2,000 horsepower and represent an upgrade over previous rig designs.

Maroun Co. Records Strategic Success

Specialists at Maroun Oil and Gas Production Co. (MOGPC) have successfully revised the performance curve and surge control line of thermodynamic centrifugal compressors—transforming technical obstacles into opportunities for the development of local knowledge and technological progress.

Qobad Nasseri, CEO of MOGPC, said that following the major overhaul of the Bangestan Compressor Station in September last year, the facility could not be fully commissioned due to repeated occurrences of surge phenomena and instability in the performance of the second- and third-row electro-compressors.

As a result, the unit was only able to operate with an intake of approximately 10 mcf/d of gas from the first stage.

He added that, in response to this issue, specialists from the processing engineering, maintenance, and gas boosting operations departments conducted technical studies and expert investigations.

They identified the root cause of the compressor instability as a “false surge” phenomenon resulting from a reduction in the molecular weight of the incoming gases—which had led to a drop in wellhead flow pressure and diverted a significant portion of the production stream to the second separation stage. Consequently, a specialized task force comprising experts from MOGPC and National Iranian South Oil Co. (NISOC) was established with the objective of revising the performance curve and surge control line of the station’s compressors.

Nasseri added that, following expert meetings, specialized studies, and field tests, the task force successfully derived a new performance curve and surge control line for these units and applied the results to the control system.

He said the successful implementation of this innovative, knowledge-driven initiative enabled the Bangestan Compressor Station to return to full production with two active rows, fully restoring the unit’s operational capacity.

He described this achievement as a testament to the capability of the oil industry’s specialists in resolving complex technical and operational challenges—and to the synergy of knowledge, experience, and round-the-clock effort. By relying on domestic capacities, they were able to deliver a sustainable and scientific solution to one of the facility’s most critical operational problems.

Nasseri cited the recovery of approximately 10 mcf/d of surplus gas (totaling 20 mcf) from the flare gases of the first, second, and third stages, the prevention of environmental pollution, and the avoidance of hydrocarbon resource wastage as among the most significant outcomes of this project.

He added that the importance of this success becomes even more apparent when one considers that the foreign manufacturer of this equipment had, in recent years, refused any technical cooperation—whether in studying, revising, or applying changes to the operating conditions of its equipment—under the pretext of sanctions. Nevertheless, our specialists developed the requisite technical knowhow for redesigning the performance curve and modifying the surge control system of these compressors without any reliance on the foreign party.

Nasseri also said that the achievement may be regarded as yet another successful example of the indigenization of advanced technologies and the upgrading of industrial equipment within the oil and gas industry—and as an effective step toward enhancing operational resilience, reducing foreign dependence, and rendering sanctions ineffective.

Energy Efficiency Plan at Abadan Refinery

The CEO of the Abadan oil refinery, Fardin Rashedi, has described achievement of international production standards and maximization of energy efficiency as key priorities for the facility.

He said that energy efficiency projects—owing to their pivotal role in reducing operational costs and enhancing productivity—hold a special and priority status alongside capacity expansion projects.

Rashedi noted that the facility’s current energy intensity index is estimated at 2.38 gigajoules per tonne. According to the latest report from the Energy Management and Efficiency Department, as of March, this figure represents approximately 12.5% better performance compared to the global standard benchmark of 2.72 gigajoules per tonne.

Referring to the efficiency status of the refinery’s process equipment, he further noted that given the structural age of the Abadan refinery, continuous monitoring and performance analysis of furnaces and boilers indicate that current combustion efficiency stands at approximately 74% for furnaces and 84% for boilers.

Accordingly, with the aim of raising process furnace efficiency to around 88%, measures—including repairs and the procurement of required Air Pre-Heater (APH) equipment for the furnaces of Units 200 and 51—have been scheduled.

Touching on deployment of new technologies in the refinery’s development projects, Rashedi said that in new development schemes—particularly in Phase 2 of the refinery—measures such as the implementation of heat recovery systems, including APH and Waste Heat Boilers (WHB), have been carried out in the hydrogen, hydrocracker, and sulfur units. As a result, the Abadan refinery ranks first among the country’s refineries in the utilization of heat recovery systems for high-pressure and low-pressure steam generation.

He went on to emphasize the implementation of flaring management projects at the refinery complex, stating that gas flaring at the flares is continuously monitored and assessed. Currently, the Flare Gas Recovery Unit (FGRU) No. 1, with a capacity of five tonnes, is recovering flare gases and injecting them into the refinery’s fuel system.

Furthermore, a second flare gas recovery unit with a nominal capacity of five tonnes per hour is currently in the technical and economic evaluation phase for tendering.

Rashedi added that the refinery complex supplies approximately 14 megawatt-hours of electricity to the regional grid during the period from early June to early October. Considering that the refinery generates 30 megawatt-hours of its own power requirements, the refinery’s total contribution to the national grid amounts to 44 megawatt-hours—equivalent to approximately 8% of Abadan city’s total electricity consumption and about 12.6% of Khorramshahr’s consumption.

Fajr Energy Power Plant Capacity to Hit 2,500MW

The reconstruction project manager of Persian Gulf Fajr Energy Co. (PGFC) has announced the successful completion of the first phase of the complex’s recovery in less than fifteen days.

Abdollah Alipanah Behnamiri said that the reconstruction and development plant—targeting a total capacity of 2,600 MW across the Plants No. 1 and No. 2—is currently being executed with a horizon of approximately 22 months, aimed at enhancing the stability of energy supply for industries in the region.

Referring to the 4 April incident and the damage inflicted upon a portion of the power generation facilities due to enemy attack, he said that immediately following the incident, the company’s management resolved to focus on the swiftest possible recovery of the remaining units and the restoration of production capacity.

The approach was adopted not only to maintain service stability but also to convey a message of resilience and continuity to stakeholders, the market, and the nation’s industry.

He added that to this end, a reconstruction and development strategy was formulated across three phases—short-term, medium-term, and long-term. The first phase, aimed at initial recovery and the rapid return of operable units to the production cycle, was accomplished in less than fifteen days.

Behnamiri said that the initiative played an effective role in sustaining the stability of energy supply for regional industries, adding: “The rapid recovery of existing capacities, beyond its significant economic benefits, conveyed a clear message to the market and industry stakeholders: that PGFC continues its operations with unwavering strength, capability, and reliance on the knowledge and experience of its specialists.”

Regarding subsequent stages of the reconstruction plan, he explained that following technical, engineering, and management studies, the company’s medium- and long-term strategy was defined along two parallel tracks.

The first track encompasses the repair, reconstruction, and maximum recovery of damaged turbines, generators, and equipment at Plants No. 1 and No. 2. The second track focuses on the design and construction of new combined-cycle power plants aimed at restoring previous capacity and expanding generation capacity.

Noting that in the implementation phase, debris removal operations, the dismantling of damaged units, and site preparation have commenced and are progressing at a favorable pace, he continued by stating that specific implementation plans have been developed for Plants No. 1 and No. 2, with operational teams working round the clock.

On the progress of engineering and design activities for the new plants, Behnamiri said that concurrently with reconstruction operations, the design and engineering of the new combined-cycle plants are also underway to ensure that repair and development projects advance in parallel.

He put the planned capacity for Plant No. 2 at 1,600 MW and for Plant No. 1 at 1,000 MW, adding that through the recovery of damaged turbines and the implementation of development plans, local power generation capacity and network reliability will be significantly enhanced.

He recalled that the initial horizon for the reconstruction project is the restoration of gas units within approximately one year, while the completion of the new combined-cycle plants will follow a timeline of roughly 22 months.

Behnamiri expressed hope that through the dedication of specialists, staff, and project contractors, the reconstruction and development plans will be realized in accordance with the scheduled timeline.

With the commissioning of the new plants and the increase in steam generation capacity, the stability of energy supply for industries within the Petrochemical Special Economic Zone will be further strengthened.

BIPP Production Units to Start Up Soon

The CEO of Bandar Imam Petrochemical Plant. (BIPP) has announced that the reconstruction and renovation operations of the facility’s steam power plant are proceeding with accelerated momentum, stating that the facility’s production units will soon return to the operational cycle.

Sepahdar Ansari-Nik, referring to the damage sustained by BIPP during the recent war, stated that the reconstruction and renovation of the complex’s steam power plant are moving forward at speed, and that the production units will soon be brought back into the production cycle.

Stressing the economic standing of BIPP, he stated that last calendar year, the facility produced approximately 5 million tonnes of petrochemical products and recorded around $1 billion in exports, positioning it as a key player in the national economy.

He expressed hope that, by overcoming current conditions, the plant would continue to play an effective role in national production and exports in the coming year.

He added that, according to institutionalist theories, the quality and functioning of institutions play a decisive role in reducing transaction costs, facilitating contracts, improving supply chains, and ultimately advancing the country’s industrial development.

Noting the extensive interconnections between the petrochemical industry and various governmental bodies, Ansari-Nik went on to say that the Ministry of Petroleum, Ministry of Industry, Mine and Trade, and Ministry of Economy and Finance, along with the Trade Promotion Organization, Customs, Ports and Maritime Organization, and Special Economic Zones—each directly influence the performance and productivity of industrial enterprises. Any lack of coordination or overlap in the functions of these institutions may impose significant costs on production.

He cited the multiplicity and overlap of institutional mandates, frequent regulatory changes, the lack of adequate information infrastructure, and the simultaneous pursuit of policymaking and operational execution as instances of institutional deficiencies, adding that these factors lead to increased production costs, diminished capacity for long-term planning, and reduced investment in the industrial sector.

On the tension between “instrumental rationality” and “value rationality” within the country’s governance structure, Ansari-Nik said that in many cases, institutions—due to the imposition of multiple and sometimes contradictory mandates—drift from their primary functions and experience a form of functional vacuum.

Noting that certain distributional policies in recent years have shifted the priorities of development-oriented institutions, he said an excessive focus on securing resources for subsidy payments has diverted a portion of the strategic capacity of the country’s economic institutions from matters such as investment, infrastructure development, and long-term planning.

He also stressed that supporting vulnerable segments of society is an undeniable necessity, but that distributional policies must be designed in a manner that does not hinder productive investment or the development of the country’s economic capacities.

Ansari-Nik underscored the need for solutions including the continuous evaluation of the effectiveness of institutions influencing industrial development, the establishment of specialized commercial courts, the utilization of independent assessments, the benchmarking of successful experiences from industrialized nations, and the creation of effective mechanisms for coordination among economic institutions.

On the necessity of reforming certain governance models to achieve sustainable industrial development, he said leveraging national advantages—such as oil, gas, minerals, coastlines, and transit corridors—alongside strengthening institutional functions, standardizing governance processes, and fostering a culture of productivity, may lay the groundwork for an industrial leap forward and enhance the resilience of national economy.

Opportunity for Convergence with Prospective Gas Fields

Damaged South Pars Refineries to be Rebuilt

Sahar Saeedian

Iran’s gas industry is on the verge of one of its most significant transitional periods, and despite the challenges following the imposed war, opportunities lie ahead for rethinking and revising its development path.

The damage to four refineries located at Site 1 of the massive South Pars gas field during the Ramadan War, and their temporary shutdown, while resulting in a reduction of the country’s gas processing capacity and inflicting damage on the strategic infrastructure of the gas industry, has created conditions in which one can think beyond the mere reconstruction of facilities.

Now that rebuilding and restoration plans for these refineries are on the agenda, a suitable opportunity has arisen to also consider certain strategic considerations that have been raised in gas industry development studies over the past years.

One of the most important of these considerations is the future of the South Pars refineries in the decades ahead and their role in processing gas from other Iranian fields after the world’s largest gas field gradually enters a period of natural production decline.

For years, in development documents and studies of the oil industry, utilizing the enormous refining capacity created along the 32-kilometer coastal strip of Bushehr Province in the Assaluyeh and Kangan regions to process gas from fields such as Kish, North Pars, Balal, Farzad, and others has been examined as a national strategy. This strategy can prevent part of the country’s processing capacity from remaining idle in the future and significantly reduce the development costs of new fields.

However, achieving this goal requires creating compatibility between the specifications of gas produced from new fields and the process requirements of refineries that were all designed to process South Pars gas. From this perspective, the reconstruction of the damaged refineries can be seen as a rare opportunity to revise certain design considerations, increase feedstock flexibility, and prepare existing infrastructure to play a role beyond their current mission.

This is an opportunity that not only appears rational from an economic and investment standpoint but also can play an important role in increasing the productivity of existing assets and reducing the development costs of other gas fields in the Persian Gulf region.

 

Beyond South Pars

 

Few gas fields in the world can be found that have had an impact on a country’s economy and energy security comparable to that of South Pars. Over the past two decades, this field has supplied enormous portion of the country’s gas needs, feedstock for petrochemical industries, fuel for power plants, feedstock for the Persian Gulf Star Refinery, and a significant portion of Iran’s industrial needs.

However, the technical reality of hydrocarbon reservoirs is that no producing field, not even the largest one, is immune to the natural cycle of maturation and production decline. South Pars is no exception to this rule, and reservoir studies have for years emphasized the necessity of planning for pressure decline management and maintaining production capacity in the coming decades.

The response of Iran’s gas industry to this challenge is not solely limited to implementing pressurization projects. Although pressurization will be one of the most important tools for maintaining field production, planning must be also made simultaneously for a period in which the share of other gas fields in the country’s production portfolio gradually increases.

Emerging Thought

In the final years of South Pars development, a question arose among planners of Iran’s oil and gas industry: what would happen to the enormous refining infrastructure built in the Assaluyeh and Kangan regions once the field entered its natural production decline period?

The answer to this question laid the groundwork for the formation of a strategic mindset within the gas industry. According to this mindset, existing refineries should not be viewed merely as processing facilities for a specific field, but rather as a strategic gas processing hub capable of receiving its required feedstock from a portfolio of gas fields across the Persian Gulf region.

The logic behind this approach was clear: utilizing existing massive refining capacity would be far more economical than building a new set of refineries for each independent field. Furthermore, the Pars Special Economic Energy Zone (PSEEZ) possesses advantages whose recreation elsewhere would require extremely heavy investment and a long period of time.

Within this framework, fields such as Kish, North Pars, Balal, Farzad A, Farzad B, and several other gas structures in the Persian Gulf were studied at various times as potential options for supplying feedstock to the South Pars refineries.

Main Challenge: Persian Gulf Fields’ Features

Although transmitting gas from new fields to the existing South Pars refineries seems, at first glance, to be an effective and economical solution, the technical reality of the gas industry is more complex than merely building pipelines to operationalize this transmission.

Each gas reservoir has unique characteristics in terms of its produced fluid composition. The ratios of methane, ethane, propane, and other hydrocarbons, as well as the levels of carbon dioxide, hydrogen sulfide, water vapor, sulfur compounds, mercury, and other impurities, may vary significantly from one field to another.

In contrast, gas refineries are also designed based on specific specifications of the delivered feedstock. The capacity of process equipment, dimensions of separators, performance of sweetening units, sulfur recovery systems, dehydration equipment, safety margins, and so on are all designed based on a particular composition of inlet gas.

For this reason, feasibility studies

conducted over the past years have consistently emphasized the necessity of either creating “compatibility between the gas feedstock specifications of new fields and the process capabilities of existing refineries” or constructing pre-processing facilities.

Feed Flexibility: Key to Survival

In the modern literature of gas refining and processing, one of the most important indicators of a refinery’s value is its degree of flexibility in accepting diverse feedstocks—a concept referred to as “Feed Flexibility.”

From this perspective, the reconstruction of the damaged refineries at the joint South Pars field could create a rare opportunity to explore the possibility of increasing feed flexibility at these facilities. Under normal operating conditions, implementing extensive process changes typically requires production shutdowns, reduced processing capacity, and significant expenditures. However, when a portion of the facilities enters a reconstruction cycle, it becomes possible to revise certain design bases, upgrade equipment, and enhance the capability to receive feedstock that is more diverse.

Such an approach does not mean completely altering the refineries’ design; rather, the goal is to create the ability to accept a broader range of gas specifications from future production—a capability that could increase the strategic value of these national assets for decades to come.

Last Opportunity for Strategic Changes

Perhaps the most important point to consider when assessing the current situation is that similar opportunities rarely occur throughout a refinery’s lifetime. In past years, the country’s continuous need for natural gas has forced the refineries of the joint South Pars field to operate at very high rates, in many cases close to their nominal capacity. Under such conditions, any prolonged shutdown to carry out modification projects would entail significant economic and operational consequences.

Now, however, part of these constraints has been naturally removed during the reconstruction operations. From this perspective, the current reconstruction can be seen as the last low-cost, low-risk opportunity to implement certain strategic changes—changes that, if attempted in the coming years, would likely require far greater expenditures.

Saving on Future Investments

One of the most important advantages of adapting existing refineries to receive feedstock from prospect fields is the reduction in the need for massive investments to build new facilities.

Constructing a new gas refinery on the scale of the South Pars refineries requires multi-billion-dollar investments, long implementation timelines, and the provision of a vast array of equipment and infrastructure.

In contrast, utilizing existing capacities and carrying out targeted process modifications to accept feedstock from new gas fields can eliminate a significant portion of the required capital expenditures (CAPEX).

In addition to reducing construction costs, attention must also be paid to the advantages of the ready-made infrastructure of PSEEZ—infrastructure that includes specialized ports, gas transmission networks, industrial electricity and water facilities, repair centers, logistical amenities, airports, telecommunications networks, and specialized human resources that have been developed in this region over the years.

New Field Development and Energy Security

In the coming years, the development of Iran’s independent gas fields will play an important role in maintaining the country’s gas production balance. The sooner these fields come online, the greater the potential to compensate for part of South Pars natural production decline, enhance gas production capacity to meet consumption needs, and thereby preserve the nation’s energy security. However, the success of this strategy is not limited solely to reservoir development. The existence of organized and flexible processing infrastructure is equally important.

For this reason, simultaneous planning for the development of new fields and the preparation of refineries to receive their feedstock must be viewed as two complementary parts of a single strategy.

Of course, the selection of the destination refinery for each gas field is not solely dependent on the compatibility of feedstock specifications with the refineries’ process capabilities. The distance from the field to processing facilities, the capital and operational costs of constructing gas transmission pipelines, the capacity of existing infrastructure, and operational and maintenance requirements are also among the  relevant determining factors.

From Refineries to Gas Processing Hub

Perhaps the most significant conceptual shift in viewing the future of the South Pars operational region is altering the South Pars refineries from “field-specific refineries” to “Iran’s National Gas Processing Hub.’

In such a model, the refineries’ feedstock can be supplied from various sources over time, and the existing infrastructure, rather than being dependent on a single reservoir, serves the country’s entire gas portfolio.

This approach, in addition to enhancing the flexibility of the gas industry, also reduces the risks associated with the production decline of a specific field, and significantly extends the economic life of existing facilities.

Conclusion

Today, the reconstruction of a portion of the South Pars refineries is not merely a repair and capacity restoration project. This process can become the starting point for redefining the role of southern Iran’s processing infrastructure in the long-term horizon of the country’s gas industry.

If, alongside restoring lost capacities, attention is also paid to the issue of adapting the refineries to the gas specifications of new fields under development, the outcome will transcend that of an ordinary reconstruction. In that case, Iran’s gas industry will not only have modernized part of its infrastructure but will also have taken a significant step toward preparing for the post-South Pars production decline era.

Such an approach may increase the economic value of existing assets and reduce future development costs, enhance the flexibility of the country’s gas production and processing network, and solidify the position of the South Pars operational region as one of the world’s most important gas processing hubs for decades to come.

Iran Petchem Sector on Postwar New Path

Iran’s petrochemical industry is currently at one of the most critical junctures in its history—a phase in which post-war reconstruction, development of new capacities, completion of the value chain, and attraction of domestic and foreign investments are being pursued simultaneously. Although the imposed war caused damage to some of the country’s petrochemical infrastructure and plants, the rapid reconstruction of affected units, and the continued implementation of development projects demonstrate that Iran’s petrochemical industry has not only veered off its growth path but also has entered a new phase of revival, modernization, and jump.

While many oil-rich countries around the world are seeking to reduce their dependence on crude oil exports and move toward value-creating industries, Iran’s petrochemical industry has become one of the most important tools for achieving this goal. Today, this industry is not merely a production sector; rather, it serves as the driving engine of the country’s non-oil economy, one of the most vital sources of foreign currency earnings, and the link between vast oil and gas resources and thousands of downstream industrial units.

Value Generation

The importance of the petrochemical industry becomes even more evident when we recognize that selling crude oil and unprocessed gas means handing over a large portion of the economic value of hydrocarbon resources to other countries, whereas converting these resources into petrochemical products generates several times more value.

Approximately 25% of the country’s non-oil exports and nearly 19% of the value in Iran’s industrial sector are contributed by the petrochemical industry. In the first layer of downstream industries, petrochemical products generate up to 100% value, while in midstream sectors, the value ranges between 70% and 100%. For this reason, the industry has become one of the most important tools for economic development, job creation, and enhancing national economic resilience.

Experts refer to the petrochemical industry as an example of “economic passive defense”—an industry that, even under sanctions and external pressures, has been able to supply a significant portion of the country’s foreign exchange needs. Over recent years, about half of the foreign currency required by Iran’s economy has been directly or indirectly provided through the activities of the petrochemical industry.

Iran Standing in Petchem Market

Iran’s petrochemical industry has traversed a path of more than 60 years, and despite many ups and downs in its development process, it reached a production capacity of over 100 million tonnes (mt) last calendar year—a growth that has positioned Iran’s petrochemical industry as one of the largest in the region.

Today, Iran is the second-largest petrochemical power in the Middle East. Saudi Arabia holds the top spot with approximately 42% of the regional market share, while Iran ranks second with about 30%. Qatar, the UAE, and Turkey follow at a considerable distance.

On a global scale, Iran also accounts for about 3% of the world’s major petrochemical product output. Given its vast oil and gas reserves, sustainable access to feedstock, and extensive development plans, many experts believe that Iran’s potential to improve its position in the global market is far greater than its status.

Current Status

Altogether, 79 petrochemical plants are currently operational in the country. The industry’s nominal production capacity has surpassed 100 mt/y. Assaluyeh, with 28 plants and a capacity of 48.4 mt/y is the largest petrochemical hub in the country; and thanks to its direct access to the South Pars gas field, is considered the beating heart of Iran’s petrochemical industry.

Mahshahr, with 21 plants and a capacity of 25.8 mt/y, is the second-largest petrochemical hub in the country. In addition, 30 other plants with a capacity of 25.6 mt/y are operating in other regions of the country, reflecting the geographical expansion of this industry and its role in balanced regional development.

Unstoppable Industry

Although the third imposed war targeted some petrochemical plants and infrastructure, Iran’s petrochemical industry once again demonstrated its ability to overcome crisis.

Immediately after certain units were damaged, operations to assess damages, procure equipment, carry out reconstruction, and resume production began. Leveraging domestic technical and engineering capabilities, an extensive network of equipment manufacturers, and decades of experience in the industry enabled the reconstruction process to commence at a remarkable pace.

Today, many of the damaged units are on the path back to production, and the reconstruction projects are being implemented not only with the goal of compensating for losses but also with an approach focused on technological modernization, enhancing productivity, and enhancing production standards.

This process sends a clear message to global markets: Iran’s petrochemical industry is rapidly returning to international markets, and the war has not been able to halt the long-term development path of this industry.

Value Chain Completion

Alongside reconstruction, one of the most important missions of Iran’s petrochemical industry is completing the value chain. A significant portion of the country’s current exports consists of intermediate products in the production chain, which are then turned into final goods in other countries.

Iran’s National Petrochemical Company (NPC) has identified approximately $2 billion worth of imported goods that can be manufactured domestically and has formulated a roadmap for developing the value chain, outlining a new path for investment in this industry.

The goal of this program is to direct investments toward the production of final, specialized, and knowledge-based products, thereby enhancing added value while reducing the country’s dependence on imports.

Big Projects

Alongside the reconstruction process, Iran’s petrochemical industry is also pursuing one of the largest development programs in its history. Under the 7^th Five-Year National Economic Development Plan, the implementation of 61 petrochemical projects with a capacity of 32.1 mt and an investment of $24.3 billion has been envisioned. Furthermore, under the 8^th Plan, 46 additional projects with a capacity of 51.3 mt and a required investment of $44 billion have been targeted.

In addition, new development zones such as Makran, Parsian, Jask, Qeshm, and the second phase of Mahshahr have been defined as prospective hubs of the petrochemical industry. The Makran region, due to its direct access to high seas and its exceptional transit position, will be one of the most important centers for attracting investment in the coming years.

Iran, Attractive Destination

Perhaps the most important question for international investors

is; “why should they choose Iran’s petrochemical industry?” The answer lies in a set of competitive advantages that few countries possess concurrently. Iran holds one of the world’s largest oil and gas reserves, ensuring long-term and sustainable access to the feedstock required by petrochemical units. This advantage significantly reduces production costs and increases the rate of return on investment.

On the other hand, Iran has direct access to international open waters and is connected to global markets through the Persian Gulf and the Sea of Oman. Proximity to 15 countries, access to regional markets, extensive export infrastructure, a transportation network, skilled human resources, and competitive production costs are among the other advantages of investing in this industry.

From 1978 to 2022, approximately $87 billion invested in Iran’s petrochemical industry, of which nearly 19% was financed through foreign sources. This record of accomplishment shows that Iran’s petrochemical industry has managed to build trust on the part of foreign investors even under tough international circumstances.

Today, attracting foreign investment has become one of the main priorities of NPC. Presenting investment opportunities in international forums, leveraging economic cooperation platforms such as BRICS and the Shanghai Cooperation Organization (SCO), offering legal incentives, exemptions in free trade and special economic zones, and providing protective guarantees for foreign investors are all part of the policies aimed at attracting capital to this industry.

Age of Petchem Refineries

The future vision of Iran’s petrochemical industry is based on the development of petro-refineries, completion of the value chain, and the production of high-technology products.

Currently, the share of petrochemical products in Iran’s refineries is less than 3%, whereas in many leading countries around the world, this figure reaches 65% to 70%. The target set is that in Iran’s new-generation refineries, at least 30% of output will be allocated to petrochemical products.

This transformation could dramatically enhance the added value of the oil industry and turn Iran into one of the most important players in the global energy and petrochemical value chain.

Today, Iran’s petrochemical industry stands at the intersection of reconstruction and development. A production capacity of over 100 mt, tens of billions of dollars in ongoing projects, access to cheap and sustainable feedstock, extensive industrial infrastructure, a privileged geographic position, and plans to complete the value chain—all indicate that Iran is making a powerful return to the global petrochemical market.

In this context, the post-war reconstruction period can be seen not merely as a phase of restoration, but as the beginning of a new chapter in development, investment, and a more prominent presence for Iran in the global economy. In addition, a chapter could transform the petrochemical industry into the most important engine of the country’s economic growth in the decades to come.

Reconstruction Work Underway

The signs of Iran’s petrochemical industry returning to normal conditions are not limited to development plans and targets; the process of reconstructing damaged units has also entered an operational phase. Hassan Abbaszadeh, CEO of NPC, has announced the concurrent launch of two main phases for restoring the industry’s damaged capacities—a plan that demonstrates the reconstruction of petrochemical plants is being carried out with a coherent, phased approach and a clear timeline.

According to this plan, in the first phase, priority has been given to restoring the production capacity of companies that were not directly damaged by the third imposed war.

The goal of this measure is to bring existing capacities back into production as quickly as possible and to prevent disruptions in the supply of needs to domestic industries and downstream units. Within this framework, petrochemical plants that did not suffer direct damage from the third imposed war are returning to full operation using available resources and facilities.

This approach is important because the petrochemical industry is not merely an independent production sector; it is a supplier of raw materials to thousands of industrial units across the country. Hundreds of manufacturing units in plastics, packaging, automotive, construction, household appliances, textiles, agriculture, pharmaceuticals, and medical industries depend on petrochemical feedstock and products. Therefore, prioritizing the supply of feedstock to downstream industries and maintaining production flow is part of the broader strategy of the Ministry of Petroleum and NPC to preserve the sustainability of the country’s production chain.

Concurrently with these efforts, the second phase of reconstruction has also begun. In this stage, operations such as debris removal, technical assessment, damage estimation, and preparation for the reconstruction of directly targeted units, are underway.

According to petrochemical industry officials, the damages have been precisely assessed, and action plans for reconstructing these units have been formulated. We are hopeful that by relying on domestic engineering and manufacturing capabilities, a significant portion of the reconstruction work will yield results in the shortest possible time.

A notable point is that decades of experience in developing Iran’s petrochemical industry, along with the extensive capacity of engineering companies, domestic equipment manufacturers, and skilled human resources, have today become one of the country’s most important advantages in the rapid restoration of damaged units. Over the past years, Iran’s petrochemical industry has managed to localize a large part of its technical and equipment needs, and this is now significantly accelerating the reconstruction process.

Many experts believe that the current reconstruction is not merely about compensating for war damages; rather it is an opportunity to modernize equipment, upgrade technologies, and improve energy efficiency, increase safety factors, and move toward new production standards. In other words, some of the units being reconstructed today will be able to operate with more advanced technologies and higher efficiency than in the past, once they are brought back online.

Phased Start of Investment Attraction

The initiation of reconstruction operations for damaged units alongside the continued execution of dozens of new development projects sends a clear message to global markets: Iran’s petrochemical industry has not only overcome the shock of the war but also has embarked on a new leap forward, relying on extensive infrastructure, vast hydrocarbon resources, domestic engineering capabilities, and long-term development plans.

Therefore, many analysts view the coming period not merely as an era of reconstruction, but as the beginning of a new phase of growth and investment attraction in Iran’s petrochemical industry—a phase in which infrastructure rebuilding, capacity expansion, value chain completion, and the inflow of fresh capital are pursued simultaneously. It potentially strengthens Iran’s position in the regional and global petrochemical market more than ever before.

In fact, what is happening today in Iran’s petrochemical industry is not simply a return to pre-war conditions, but the formation of a new era of development. An era in which reconstruction is intertwined with expansion and the revival of existing capacities is pursued alongside the creation of new ones. This approach could turn Iran’s petrochemical industry into one of the few successful instances of concurrent reconstruction and development among hydrocarbon-rich countries.

Mideast Energy Future:

Regional Role and Investment Opportunities

Ehsan Jenabi

Senior Energy Analyst

Introduction

The Middle East has long been the world’s most vital source of oil and gas and despite accelerating global energy transitions, its strategic importance in meeting the world oil and gas needs is not diminishing. For the coming decades, the region will remain the central pillar of global energy supply. However, the landscape is evolving: demand patterns are shifting toward Asia, natural gas is gaining prominence as a clean fuel of choice with rather low emission in the energy transition, and investment needs are enormous. In this context, regional countries - especially those with underutilized infrastructure like Iran in the post-war era - have a perfect opportunity to attract foreign capital with reasonable investment rate of return (IRR).

The present article aims to look into the future of Middle Eastern oil and gas markets and provide potential international investors with the region’s enduring relevance and Iran’s detailed potential.

Future of Mideast Oil and Gas

• A Persistent Strategic Role

The Middle East holds approximately 48% of the world’s proven oil reserves and 40% of its natural gas reserves. Crude oil production costs remain among the lowest globally, often below $10 per barrel for key fields in Iran, Saudi Arabia, Kuwait and Iraq. This cost advantage ensures that Middle Eastern oil and gas will be among the last supplies to be displaced by the energy transition. Even in extremist net-zero scenarios, the region is projected to supply over 30% of global oil demand in 2040, and an even larger share of global LNG trade.

• Role of Oil in Transport Sector

Globally, oil remains the dominant fuel for transportation, although its share is facing pressure from electrification and energy efficiency gains. As of 2024, the transport sector accounted for approximately 60% to 70% of total global oil consumption. Within the sector, oil products like gasoline and gas oil maintain an extremely high share of the energy mix, hovering between 85% and 90%. Road transportation is the primary driver of this demand, responsible for nearly half (roughly 40-45%) of worldwide oil use. However, some analysts are of the pinion that this dominance is beginning to erode, as demand growth in road transport has slowed markedly since 2022, due to the rapid deployment of electric vehicles (EVs), energy efficiency improvements, and policy shifts. This trend is particularly evident in major markets like China, where the rise of EVs and high-speed rail is curbing oil demand, even as sectors like aviation and petrochemicals continue to provide growth.

Oil-to-Gas Switch

As the global energy transition accelerates away from carbon-intensive fuels, natural gas has emerged as a critical and often contentious “bridge fuel” between coal and a zero-carbon future. Advocates argue that gas-fired power plants emit roughly half the CO₂ of coal plants and far fewer conventional pollutants, making gas an indispensable tool for rapidly reducing emissions while maintaining grid reliability and supporting the buildout of intermittent renewables like wind and solar. Its ability to ramp up and down quickly complements renewable volatility, displacing dirtier peaking plants. Nevertheless, this role is severely debated: methane leakage across the gas value chain - from production to transport - can erode or even negate its climate advantage over coal, while locked-in gas infrastructure risks creating stranded assets if net-zero timelines tighten. Thus, natural gas prominence in the transition depends on stringent methane abatement, carbon capture and storage (CCS) integration, and a clear pathway toward hydrogen (produced from gas with CCS or from electrolysis), positioning natural gas not as an endpoint, but as a transitional enabler toward a decarbonized energy system.

While global oil demand may plateau in the 2030s, natural gas is set for prolonged growth. The Middle East is uniquely positioned to benefit. Qatar is expanding its LNG capacity from 77 million tonnes to 126 million tonnes per year. Some gas producing countries, particularly Iran (with the world’s second-largest gas reserves) are all prioritizing gas development for domestic consumption and export. As Europe and Asia seek alternatives to Russian pipeline natural gas (PNG), Middle Eastern LNG particularly that of Qatar is emerging as a critical flexible supply source.

Regional Cooperation and Competition

In the Middle East, oil and gas dynamics simultaneously foster regional cooperation and intense competition. On one hand, OPEC+, led by Saudi Arabia and including major producers like Iraq and Kuwait, exemplifies collaboration through coordinated production quotas aimed at stabilizing global prices and managing supply trend. On the other hand, competition is severe: Iran, Qatar vie for dominance in the South Pars/North Dome, the world’s largest gas field. Geopolitical rivalries - particularly between Saudi Arabia and Iran - play out through divergent energy strategies, with each seeking to influence oil market, attract foreign investment, and secure strategic export routes. Additionally, the race to diversify economies away from fossil fuels (e.g., Saudi Vision 2030 vs. UAE’s clean energy push) adds another layer of rivalry, as future gas and clean tech leadership becomes a new frontier of competition, even as traditional hydrocarbon cooperation persists.

Over the coming years will witness both cooperation and rivalry. On one hand, OPEC+ (led by Saudi Arabia and Russia) will continue to manage oil supply to stabilize prices. On the other hand, competition for market share in Asia - particularly by China and India

- will intensify. Additionally, gas-rich countries will compete to sign long-term contracts, before buyers commit to renewable alternatives mainly introduced and reinforced by COP approvals. The successful countries will be those that offer reliable, fair-cost, and low-emission supply, potentially integrating carbon capture and storage (CCS) to mitigate the carbon footprint of exported hydrocarbons.

Challenges on the Horizon

• Energy Transition Risk: Long-term oil demand uncertainty may dissuade investment in new capacity unless fiscal terms and conditions are lucrative and attractive.
• Geopolitical Disorder: Conflicts, sanctions, and tensions in the Strait of Hormuz (through which 20% of global oil passes) remain persistent risks.
• Capital Scarcity: Many regional producers need substantial investment to maintain and/or raise production, but global capital is increasingly restricted by ESG (Environmental, Social, Governance) criteria, which is of great importance.

Region Remains Indispensable

The Middle East is not merely an option for energy supply, but a necessity. The IEA and OPEC both project that upstream oil and gas sector requires investment of over $500 billion annually through 2030 to offset natural declines and meet demand. A significant portion of that investment must go to the Middle East, where the resource base is largest and production costs lowest.

Divesting from regional hydrocarbons, or ignoring them is not a pragmatic climate strategy; rather, engaging and improving environmental performance through technology transfer and best practices offer a faster path to real emissions reduction. Countries in the region are actively seeking foreign partners for enhanced oil recovery (EOR), associated petroleum gas capture (reducing flaring), CCS hubs, and renewable integration.

Iran: A Suitable Platform for Investment

There are many features making Iran attractive for potential investors. Chief among them are as follows:

• Abundant Hydrocarbon Resources: Iran holds some of the world’s largest oil and gas reserves. According to available statistics, the country holds the world’s 4th-largest proven crude oil reserves and is ranked 2nd globally for natural gas reserves (after Russia). The oil fields in Iran are largely conventional, meaning low extraction costs once developed.
• Extremely Low Cost per Barrel: Undoubtedly, low cost per barrel is a critical competitive advantage. A report from a Taiwanese financial group cited experts stating that Iran’s average cost per barrel is as low as $10, with a general range of $10 to 30per barrel. This is significantly lower than the breakeven point for U.S. shale oil, which is between $60 and $70 per barrel. This cost efficiency ensures profitability even in a lower-price environment.
• High IRR Potential: Due to current geopolitical risk (primarily sanctions), entry valuations would be highly attractive for long-term investors. Once Iran and the U.S. sign a political agreement, and conflicts are settled down, first-movers could see outsized investment rate of return (IRR).
• Existing Infrastructure: Unlike many frontier regions, Iran already has a substantial energy infrastructure: thousands of kilometers of pipelines, oil refineries, giant gas processing plants (e.g., South Pars phases), and export terminals on the Persian Gulf. The infrastructure provides an organized platform for rapid scaling of production and exports when conditions allow.

• Strategic Location and Market Access: Iran’s geography offers a unique logistical gateway to major regional and international markets. The Iranian Ministry of Foreign Affairs describes Iran as being located at the “heart of a cross-road linking the Middle East, Asia and Europe”. Iran has access to the Persian Gulf, the Gulf of Oman, and the Caspian Sea, which is a significant advantage for exporting oil, gas and oil products.

• High-Level Political Tendency: The tendency to attracting investment is demonstrated at the highest levels of the government. In January 2026, the National Iranian Oil Company (NIOC) signed investment contracts worth over $2 billion in a ceremony attended by the President of Iran, who emphasized the government’s readiness to remove any barriers that defer investment activities.
• Substantial Financial Investment: According to available data, $130 billion has been already allocated and invested in developing joint oil and gas fields; however, Iran is intending to attract more foreign investment. This addresses the strategic need to secure Iran’s share of joint reserves, and signals long-term commitment to the sector’s growth.

Proven Resilience and Growing Domestic

• Capability: Recent developments show that the Iranian oil and gas industry is both resilient and technologically self-reliant, which minimizes the operational risk for investors.

Investment Drivers and Outlook

The urgency for investment in Iran is driven by the field’s natural production decline. The project’s construction is a massive undertaking, involving the installation of 420,000 tons of equipment and the laying of 600 kilometers of subsea pipelines.

In addition, the field’s infrastructure has faced challenges. An analysis from March 2026 suggested that energy infrastructure in the region, including South Pars, has been damaged during the U.S.-Zionist Regime war against Iran and could require significant repair costs, though a specific figure for South Pars alone.

Investment in South Pars

In general, investment plays a pivotal role in Iran’s petroleum industry. However, some projects are prioritized, and one of them is South Pars development.

Total development cost for South Pars up to March 2025 was estimated at $84 billion. This includes the development of its 24 different phases since production began in 2002. The initial onshore and offshore development for a single phase (Phase 11) was estimated at around $2 billion. These figures highlight the scale of the newer, more complex pressure-boosting project. According to the Iranian Minister of Petroleum, maintaining the country’s overall gas production capacity, which includes South Pars, will require significant ongoing investment. He estimated that approximately $75billion is needed in total, with about $22 billion of that allocated specifically for production maintenance projects like the South Pars pressure-boosting initiative.

Iran Estimated Energy Repair Costs

Based on available expert analysis and recent reporting, the investment required for the post-war reconstruction of the damaged facilities at South Pars in Assaluyeh is estimated to be up to $19 billion as part of a larger energy sector recovery. This is the high-damage scenario estimate for repairing all of Iran’s impacted oil and gas facilities. This figure is part of a broader regional analysis by Rystad Energy and is directly linked to damage at the South Pars complex in Assaluyeh and other key energy hubs.

It is noteworthy that attacks on South Pars Complex and petrochemical complexes in Assaluyeh were strategically designed to hinder recovery from the complexes that generate the foreign currency.

According to an Iranian state media, the estimates in the post-war era show that in general something like $270 billion is needed to repair direct and indirect damage resulted from the third imposed war.

Overcoming Barriers

Investors persistently monitor developments in oil and gas-rich countries and naturally seek suitable venues to invest. Although domestic private sector is a pillar of development, and has a great potential to contribute to Iran’s economic growth, many international oil companies (IOCs) have expressed their willingness to invest in Iran, once sanctions are removed.

To facilitate investment process and make it more lucrative for potential investors, Iran has developed innovative contractual frameworks known as “Iran Petroleum Contract” (IPC) that offer longer terms and more attractive remuneration than previous popular contract models. For investors willing to take structured risk, e.g. through non-US entities, using local financing, or focusing on gas, as an important contributor to low-carbon economy, early positioning could be highly strategic and beneficial.

     Conclusion

The Middle East will remain the world’s energy heartland for decades. Regional countries are adapting to the transition by fostering natural gas and LNG, investing in petrochemicals, renewables and developing carbon management technologies. Investors who disregard this region will miss the largest remaining hydrocarbon growth market. In addition, within the region, Iran offers an unmatched combination of resource scale, existing infrastructure, and future advantage – if one looks beyond current political headlines.

      Timely and adequate investment, as well as technology transfer in the petroleum industry in the Middle East, particularly Iran; is among the critical factors significantly contributing to global energy security. On the other hand, violating the international law principles, adopting discriminatory policies, practicing unilateralism and taking unjustifiable military actions against major oil and gas producers definitely harm global energy security, and would lead to price volatility.

Total development cost for South Pars up to March 2025 was estimated at $84 billion. However, today the investment required for the post-war reconstruction of the damaged facilities at South Pars in Assaluyeh is estimated to be up to $19 billion as part of a larger energy sector recovery.

      Hence, Iran as a major producer whose oil and gas facilities have been attacked during the third imposed war definitely needs significant investment for reconstruction of its oil and gas facilities damaged in the third imposed war.

      Iran as one of the advocates of global energy security is firmly open for responsible, long-term energy investment; and as usual is ready to play a key role in meeting the world energy needs securely and efficiently.

Investment in Iran Oil Industry: Geopolitical Opportunities

Shuaib Bahman

Over recent years, the argument has been repeatedly made that the world is moving beyond its dependence on the Middle East. The US shale revolution, the expansion of renewable energy, and efforts to diversify supply chains all seemed to confirm the decline of traditional energy geopolitics. However, the US-Zionist Regime military aggression against Iran - known as the Ramadan War - and the subsequent closure of the Strait of Hormuz as one of its consequences have finally shattered that illusion. The strait was reopened after Iranian and US presidents signed an MOU on June 16 for Tehran and Washington to end the war. As recent events have made abundantly clear, the Middle East continues to play a decisive role in global equations, and any upheaval in the region rapidly impacts world energy markets, the international economy, and global trade. These developments raise a fundamental question: In the post-war era, with Iran’s petroleum industry being rebuilt, which smart investments can capitalize on the unparalleled opportunities offered by the Middle East and Iran’s pivotal role in the emerging energy order? The answer suggests that any strategic investment in the energy sector must inevitably turn to the Middle East - and within that, Iran, with its vast resources, high production capacity, and privileged geopolitical position, plays a prominent and undeniable role.

Mideast, Geopolitical Gravity of Global Energy

The recent US-Zionist Regime aggression against Iran, along with the subsequent closure of the Strait of Hormuz, once again demonstrated that the Middle East has not only preserved its status as the world’s primary energy supplier, but also plays the role of a “primary stabilizer” for the fragile global energy order during times of crisis.

In 2025, national oil companies in the Middle East invested over $100 billion in upstream projects, of roughly $50 billion was directed toward developing conventional oil and gas fields. That figure is expected to rise by about 10% in 2026, reaching $110 billion - a clear sign of the region’s serious commitment to maintaining and even enhancing its position in the future energy order.

At the heart of this geopolitical leverage lies the Strait of Hormuz, a chokepoint through which roughly 20 mb/d of crude oil passes - equivalent to nearly 20% of total global oil consumption. This vital waterway not only connects regional exporters - Iran, Saudi Arabia, the UAE, Iraq, Kuwait, and Qatar - to consumer markets worldwide, but also serves as the systematic “connecting node” of the global energy supply chain, with no viable alternative route available for the vast volume of oil that transits through it.

Beyond oil, the Middle East is playing an increasingly prominent role in the global natural gas market. The region now accounts for nearly one fourth of total global upstream gas investment, focused largely on developing new phases of the South Pars gas field - shared by Iran and Qatar - Saudi Arabia’s unconventional gas program, and efforts by the UAE and Iraq to achieve gas self-sufficiency. These developments indicate that the Middle East is instrumental not only in the oil market, but also in the emerging global gas order.

Energy Market Shock

The war on Iran and the ensuing insecurity in the Strait of Hormuz have jolted world energy markets with unprecedented intensity. In the weeks leading up to the start of military operations, Brent crude oil prices had been fluctuating in the range of $65 to $71 per barrel. Following the escalation of tensions, prices first surged past $100 and, at the peak of the crisis, approached the $120 mark. Natural gas prices also experienced a dramatic spike. In Europe, where energy import dependence remains near 60%, gas prices rose by as much as 75%, while diesel shortages - stemming from reliance on the region’s refining products - emerged as a severe threat.

This supply shock has impacted the global economy through inflation at an unprecedented speed. Global merchandise trade volume, which had exceeded expectations in 2025 with a robust growth rate of 4.5%, had been forecast to slow to below 2% in 2026. However, rising energy prices and logistical disruptions have pushed that figure closer to 1.5%. The Persian Gulf economies lie at the epicenter of this disruption. Continued shipping restrictions in the Strait of Hormuz could sharply reduce hydrocarbon export volumes from countries such as Qatar and Kuwait, potentially triggering their most severe recessions since the early 1990s. Even more diversified economies like Saudi Arabia and the UAE, despite their relatively stronger positions, remain vulnerable to the shock.

Smart Investment in Energy

The return of the geopolitical factor to energy markets is an undeniable reality that will redefine investment calculations in the energy sector for years to come. In this new landscape, three key indicators suggest that the Middle East is not only the epicenter of geopolitical crises, but also the primary arena for investment opportunities in the post-war era.

First, the systematic fragility of an energy order built on bypassing the Middle East: Despite the unprecedented growth of US shale oil production and efforts to reduce dependence on Middle Eastern crude, the recent crisis has demonstrated that there is no real substitute for the region’s vast oil and gas production capacity and its transit corridors. The Strait of Hormuz - through which 20% of the world’s oil passes - remains the “connecting node” of the global energy supply chain; and Iran’s privileged position in controlling this waterway makes it a decisive player.

Second, revaluation of geopolitical risk in energy investment models: For nearly a decade, international investors had discounted the Middle East “risk premium” from their calculations. But the recent price shock has shown that political risk can add $30 to $40 per barrel to oil prices. This means that investors who target the region’s energy infrastructure - including Iran - will enjoy a significant competitive advantage in the post-crisis environment. Why? Because the breakeven cost of oil production in the Middle East (under $10 per barrel in many fields) remains the lowest in the world.

Third, the shift from geo-economics back to geopolitics and the return of post-war opportunities: Historical experience shows that every major conflict in the Middle East has been followed by a period of large-scale energy infrastructure reconstruction. In such an environment, investing in the rebuilding of Iran’s petroleum industry is not merely an economic necessity but a strategic opportunity. With its vast gas reserves (second-largest in the world), technical readiness to return quickly to the market, and privileged geopolitical position in the Persian Gulf, Iran is poised to become one of the most attractive destinations for energy investment over the next decade.

A substantial portion of Iran’s oil sector requires $125 billion in investment over four years to achieve the targets of the Seventh Development Plan, which aims for production capacity of 4.6 mb/d by March 2029. Iran’s Ministry of Petroleum has defined over 200 investment opportunities valued at more than $135 billion in the oil sector and has launched new incentive packages and an oil guarantee fund to support investors.

Conclusion

The supply shock of roughly 9 mb/d stemming from recent events in the Middle East - one of the largest disruptions in the history of the oil market - has shattered traditional frameworks for analyzing energy security and investment. In this new landscape, the Middle East remains at the center of global attention, and any development there immediately and systematically impacts world markets.

Amid this geopolitical turbulence, Iran’s unique position and rare capacities in the global energy order stand out more than ever. With proven oil reserves of 157 billion barrels (approximately 12% of the world total) and 17.5% of global proven gas reserves (second only to Russia), Iran possesses one of the richest hydrocarbon endowments on the planet.

Forward-looking, smart investors rightly understand that any strategic energy investment must look to the Middle East - and within that, Iran’s role is both prominent and decisive, thanks to its vast capacities and uniquely competitive advantages. The enduring reality of the current situation is this: Iran is not merely an energy-producing country, but a symbol of “geopolitical investment opportunity” at the very heart of the world’s political economy of energy - an opportunity that will shape energy markets and the international system for years to come.

Global Neglect of Polluting War Responsibility

Nazila Haqiqati

In wars, human beings do not always die first. Sometimes, before that, water dies, the air is wounded and nature—without ever making the headlines—slowly stops breathing. War does not end on the battlefields; it continues in the invisible layers of life: in the lungs of cities, in the beds of seas, and in the soil that no longer breathes as it once did.

In the days following the attacks on energy infrastructure in Iran and the wider region, Tehran was not merely a city in distress—it was a city breathing something unknown. The soot that settled on car windows lay upon tree leaves, and seeped into the city’s very skin, was not just the residue of an explosion. It was a sign that war had crossed beyond military borders and entered the realm of daily life—a space where “security” could no longer be told “the environment.”

In the south, the Persian Gulf has once again come under simultaneous pressure—a semi-enclosed, fragile, and historic waterway already burdened by industrial development, global warming, heavy tanker traffic, coastal habitat destruction, and chronic pollution. This time, however, war has also weighed upon it—a conflict neither chosen by this ecosystem, nor one it could escape from.

What matters more than the flames, however, is the silence that has formed around this kind of destruction—a global silence in the face of damage that defies easy articulation within conventional legal and ethical frameworks. For years, the world has spoken at length about climate change, species extinction, and planetary crises. Yet when environmental devastation results from war, sensitivities drop significantly. As if, in times of conflict, the environment suddenly vanishes from the world’s moral and media agenda.

This article is an attempt to revisit war from another angle—not through the lens of military victory or defeat, but through that of natural capital, environmental justice, and the fundamental right to live in a healthy environment. In polluting wars, that right is often the first silent victim. On June 16, Iran’s President Masoud Pezeshkian and US President Donald Trump put their names to an MOU to end the war.

Wounds Reopen

Contrary to popular belief, modern wars do not end at the moment of explosion—rather, they are just beginning. The extinguishing of flames is not the end of the story, but the start of slow, hidden, and long-term processes that continue in the lungs of cities, in seabed sediments, in food chains, and in the ecological memory of the land.

In the official narrative of recent regional conflicts, the focus has often been on military objectives, defense systems, and geopolitical balances. However, in a less visible layer, one of the main victims of these conflicts has not been a political actor, but a living system: the environment.

At the time energy facilities and fuel storage tanks were attacked, the media broadcasted explosions, smoke and flames—large, loud, and narratable. Yet behind that image, a process began that is far less visible: the emission of pollutants, the spread of oil compounds into the air, soil, and water, and the formation of a chain of contamination whose effects may only become apparent years later.

The burning of oil and petroleum product storage tanks is typically accompanied by emissions of compounds such as polycyclic aromatic hydrocarbons, sulfur and nitrogen oxides, and fine particulate matter—pollutants that can have long-term consequences for human health and ecosystems.

From an ecological perspective, the Persian Gulf is one of the world’s most sensitive bodies of water: a semi-enclosed sea with limited water circulation, high temperatures, high salinity, and a limited capacity for self-purification. In such a system, any disturbance can extend beyond the local level and escalate into a regional, even transboundary, crisis.

From Lavan to Kharg

Understanding oil damage is not possible just by looking at surface slicks on the water. What is visible is merely a small fraction of a complex, multi-layered process.

The first level of damage is the disruption of the marine food web’s foundation. An oil layer on the water’s surface reduces oxygen exchange between the sea and the atmosphere. At this stage, tiny yet vital organisms—such as plankton, fish eggs, and larvae—become the first victims. These small creatures form the backbone of the ocean’s food chain, and harm to them can gradually weaken the entire ecosystem.

In the waters surrounding Lavan, Kharg, and other parts of the Persian Gulf, this disruption is accompanied by a direct threat to coral habitats. Iran is home to seventeen coral islands and rare coral ecosystems—an irreplaceable asset on both regional and global scales. Corals are structures that take decades

to form, but their destruction can occur in a very short time. Contact with oil pollution disrupts the photosynthesis of symbiotic algae, leading to bleaching or the gradual death of corals—a death that does not merely eliminate a habitat but destroys the very infrastructure of life for hundreds of marine species.

Sea turtles, migratory birds, and other keystone species also suffer in the process. Respiratory distress, poisoning, loss of mobility, and disrupted migration routes are just some of the direct consequences of this contamination.

On another level, dozens of sunken ships lying on the Persian Gulf’s seabed can, under critical conditions, become potential sources of oil and heavy metal pollution—silent sources whose effects will not emerge in the first days but will become apparent in the years to come.

Tehran Breathed War Pollution

To the north of this damaged geography, Tehran has not been spared the indirect consequences of attacks on fuel and energy infrastructure. Damage to fuel storage tanks and oil depots in certain areas has led to the release of significant quantities of soot and particulate matter. When combined with atmospheric conditions, these particles can result in acid or contaminated rain—a phenomenon whose effects are not visible only at the moment of occurrence but linger in the soil, water resources, and even urban biological cycles.

However, what truly matters is the principle of environmental uncertainty. In nature, no destructive effect is entirely predictable. Many consequences of war emerge years later, manifesting as diseases, declining soil quality, loss of biodiversity, or shifts in human settlement patterns. It is precisely this uncertainty that makes managing the environmental crises caused by war both more complex and, at the same time, more urgent.

War on Invisible Infrastructure

In the lexicon of sustainable development, the environment is not a peripheral component but the very foundation of survival and security. Environmental infrastructure—from soil and water to biodiversity and marine ecosystems—is part of a nation’s natural capital and the bedrock of its future development capacity. Destroying this capital during war is, in effect, undermining the development potential of generations to come.

Yet, in global narratives on Iran, this reality is often overshadowed by politicized readings. The cost of such destruction becomes apparent only years later—in the form of disease, depleted natural resources, displacement, and weakened social resilience.

While international bodies have repeatedly warned in recent years that contemporary wars, beyond their human toll, disrupt water, soil, food, and health chains for decades, the dominant narrative about Iran remains stalled in political and security conflicts, rather than focusing on biological security and territorial resilience.

This is despite the fact that any damage to Iran’s energy infrastructure, water resources, or fragile ecosystems does not have merely national consequences. Dust storms, pollution, water stress, and food disruptions recognize no political borders and can escalate into regional crises. Perhaps it is time for the world to revisit Iran—not only in political backrooms but also through the literature of sustainable development. In that framework, environmental destruction is no longer a “collateral damage” of crisis but the crisis itself—and a form of intergenerational debt.

Environmental Justice

One of the most fundamental questions when confronting polluting wars is that of justice. The people of Tehran have breathed the pollution. Coastal communities in the south have seen their livelihoods threatened. Fishermen, marine ecosystems, and future generations have borne costs for which they played no role in the wartime decisions that caused them.

This is precisely where the concept of environmental justice makes sense: those with the least say in the decisions bear the heaviest burden of the consequences.

Redefining the notion of a war victim is an unavoidable necessity. A victim is not merely a person trapped under rubble. A victim can be an ecosystem gradually collapsing, a coastal community watching its livelihood erode, or a generation paying the cost of present decisions in a more polluted future.

Who is Responsible?

At the international level, the fundamental question is this:

who is responsible?

International environmental organizations, including the United Nations Environment Programme (UNEP), play a vital role in monitoring, documenting, and assessing damages in such crises. Yet the existing mechanisms for addressing wartime environmental destruction remain fragmented, non-binding, and largely reactive.

Over recent years, the concept of “ecocide” has emerged as a framework for criminalizing widespread environmental destruction—an effort to place severe harm to ecosystems alongside war crimes and genocide in international law. However, this concept has not yet been fully established within the international legal system.

Nevertheless, the responsibility of the global community is not merely legal—it is also moral and developmental. Marine and airborne pollution from wars knows no borders and can have transboundary effects on food security, public health, and regional economies.

What is missing today is a real mechanism for environmental accountability in times of war:

- Independent and immediate monitoring;

- Scientific documentation of damages;

- The formation of environmental fact-finding committees; and

- A serious move toward criminalizing the widespread destruction of ecosystems under the framework of ecocide.

Sustainable Development

If the international community analyzes attacks on energy infrastructure solely from a military perspective while ignoring their environmental costs, it effectively reduces sustainable development to a concept confined to peacetime. Yet the environment needs legal, moral, and scientific protection during wartime more than at any other time.

Perhaps the greatest test of the concept of sustainable development comes not in times of calm, but in moments of crisis.

Unanswered Question

Wars end, but their effects on the environment persist. Soot is cleaned from city streets, but not always from lungs. Oil is skimmed from the water’s surface, but part of it remains in the sediments.

In addition, perhaps one day, the world will be forced to confront this question:

When the sea was burning and the air turned dark, on which side of history, did sustainable development stand?

And, will the world recognize its responsibility before the environmental costs of war become irreversible?