Ahmad Mahdavi-Abhari, secretary-general of the Employers Association of Iran’s Petrochemical Industry, welcomed what he described as a new approach by the Oil Ministry, saying the government acted following repeated calls to accelerate investment approvals.

Iran’s petrochemical sector, a key pillar of the non-oil economy, has faced mounting risks from the country’s widening natural gas imbalance. Rapid growth in residential and commercial consumption, combined with constraints linked to sanctions and delays in developing new fields, has increased the gap between supply and demand, particularly during winter months.

Natural gas is a critical feedstock for petrochemical production. In recent years, seasonal shortages have threatened the stability of supply to gas-intensive industries, affecting output at several complexes.

To address the challenge, the government approved a measure allowing large energy-intensive industries and petrochemical holding companies to invest directly in gas field development. The strategy aims to secure stable feedstock for industry while reducing the state’s financial burden in the upstream sector.

The idea had been under discussion for years but was slowed by lengthy administrative processes, Mahdavi-Abhari said.

In March 2024, during a visit to an exhibition of national achievements in Tehran, Mahdavi-Abhari raised the issue of gas imbalance and said private companies were ready to invest but had been waiting three years for permits. The following day, Iran’s supreme leader questioned why issuing a single investment license should take so long and urged faster approvals. Despite the remarks, industry representatives said progress remained limited at the time.

The issue was raised again in 2025, with the waiting period extending to four years, prompting renewed calls for action.

Oil Minister Mohsen Paknejad said in May 2025 that, since the start of the current administration, the ministry had deployed a specialized team familiar with bottlenecks in contract finalization and ratification. As a result, the time lag for signing agreements — previously measured in years — had been reduced to about six months.

Officials said the reforms helped implement the policy of facilitating private-sector participation in upstream projects and shortened the path for issuing investment licenses.

Mahdavi-Abhari said the entry of petrochemical companies into gas field development marks “a new chapter of partnership,” adding that the industry is stepping beyond its traditional downstream role to help address a national energy issue.

He praised the Oil Ministry’s efforts to cut red tape and expedite permits, saying the changes removed obstacles that had long hindered downstream investment in upstream assets.

Mahdavi-Abhari also pointed to what he called stronger government backing for production and more transparent engagement with private companies, saying the environment has improved for turning long-standing proposals into operational projects.

He rejected the notion that petrochemical producers are merely gas consumers, arguing that upstream investment is driven by the need for feedstock security. When a petrochemical holding company participates in gas production, it both safeguards supply and contributes to the national economy, he said.

Mahdavi-Abhari cited the signing of initial agreements by Bakhtar and Petrofarhang holding companies to develop gas fields, describing the deals as a model for broader industry participation. He said the significance of the contracts lies less in their size than in their structure, which could pave the way for similar partnerships.

He called the petrochemical sector the “locomotive” of Iran’s economy, citing its leading role in foreign exchange earnings and export capacity. Industry managers and operators remain at the forefront of what he termed an “economic war,” he said.

Mahdavi-Abhari acknowledged that many of the sector’s current difficulties stem from past challenges but expressed optimism that continued policy support and clearer regulatory frameworks would foster a sustained flow of upstream investment.

Analysts say the potential benefits are multi-layered: easing the gas imbalance by boosting production, stabilizing supply to all sectors, supporting steady petrochemical output, increasing non-oil export revenues, and promoting domestic development through technology transfer, job creation and expanded activity for local contractors.

If implemented at scale, the strategy could help Iran break what officials describe as a cycle of imbalance, restrictions and production cuts, while strengthening long-term energy security.