The Iranian oil industry, as one of the pillars of the country's economy, has undergone remarkable transformations over the more than four decades since the victory of the Islamic Revolution.

This industry has not only played a key role in the production and export of oil and gas but has also taken significant steps in advancing technology, achieving industrial independence, and meeting the country's energy needs.

However, alongside these achievements, there have been challenges and shortcomings that, if identified and addressed, can illuminate the path forward for this industry. In a series of interviews with a group of oil industry managers and experts, SHANA sought answers to two key questions:

1- What has been the most significant achievement of Iran's oil industry over the past 46 years?

2- What is the most important measure that has been neglected during these years?

The sixth and final part of the interviews with senior oil industry managers follows:

Saeid Khoshrou, international affairs director at NIOC (2016-21): 

The development of the oil industry, particularly natural gas production, stands out as one of the most important achievements of this era. Natural gas, as a strategic resource, has played a key role in meeting the country’s energy needs and building the infrastructure for economic development.

Expanding gas distribution networks, increasing production capacity, and establishing Iran as one of the world’s largest gas producers are among the accomplishments realized during this period. The development of gas fields such as South Pars, the launch of extensive gas networks, and the growth of gas-related industries like petrochemicals are also points of pride for the industry.

Despite these successes, challenges remain that hinder the full utilization of these capacities. One of the most significant challenges is the insistence on regulated pricing and the lack of full acceptance of market mechanisms.

Non-market pricing has, in many cases, reduced the attractiveness of investment in this sector, discouraging both domestic and foreign companies from participating in oil industry projects. Additionally, neglecting the need for investment in maintenance and modernization of facilities has, in some cases, led to reduced productivity and increased production costs. This comes at a time when global competition in the oil industry and the pressures of sanctions highlight the need for transparent and science-based policymaking.

To overcome these challenges and optimize existing capacities, a shift in policymaking is essential. Embracing market mechanisms, creating economic incentives to attract domestic and foreign investment, and strengthening international cooperation can contribute to the sustainable growth of this industry.

Saleh Hendi, exploration director at NIOC (2015-18): 

The development of South Pars is undoubtedly the most notable achievement of Iran’s oil industry since the Islamic Revolution. Before the revolution and even into the early 1990s, the region was just an ordinary port, but it has now transformed into a major energy hub and industrial empire. However, if we were to highlight a critical issue in assessing the performance of the oil industry post-revolution, it would be the failure to separate the roles of the National Iranian Oil Company and the Ministry of Petroleum. This lack of distinction has caused significant harm to the industry over the years. Had the ministry focused on its regulatory duties and left operational tasks to the company, the current situation would likely be very different, and the industry would be better managed.

Karim Zobeidi, integrated planning director at NIOC (2016-22):

There have been numerous achievements since the Islamic Revolution, with the development of the South Pars field being one of the most prominent. Before the revolution, there was no production from this field, but today, daily production exceeds 700 million cubic meters of gas, marking a significant and exceptional success. Additionally, the West Karoun fields, which were largely ignored before the revolution, have seen substantial production post-revolution, representing another major accomplishment of this era.

Furthermore, if we compare cumulative oil and gas production, we see that the 60 years prior to the revolution (from 1919 to 1977) saw far less production than the 46 years since, demonstrating remarkable growth in resource management and utilization.

Another post-revolution achievement is independence in drilling. Before the revolution, this sector was largely controlled by foreign companies, but after the revolution, with the establishment of the National Iranian Drilling Company and the rise of domestic private firms, the sector became fully localized. Despite these achievements, challenges remain.

For example, while hydrocarbon resource management has improved, it still falls short of ideal standards, particularly in gas injection and enhanced recovery projects. Another issue is the aging infrastructure in the oil and gas industry, with many facilities in need of renovation and modernization. Although projects have been planned for this purpose, they have not yet been fully implemented. While gas gathering from oil fields has improved post-revolution, more comprehensive planning and precise execution are still needed.

Insufficient investment in the oil and gas industry is another challenge. This sector requires substantial investment, but due to economic conditions and national challenges, these investments have not been adequately secured. As a result, many fields remain underdeveloped.

Morteza Behrouzifar, faculty member at Institute for International Energy Studies: 

One of the most significant achievements of Iran’s oil industry post-revolution has been the development of the gas sector. Before the revolution, due to a lack of technology and global demand, natural gas was largely flared and not utilized effectively.

At the time, there were no environmental concerns as we see today, nor was there significant investment in gas collection and utilization. However, after the revolution, particularly during the Iran-Iraq War, the importance of gas as a primary energy source became evident.

With the development of gas reserves and infrastructure, gas became a key energy source for households, industries, and power plants. Without this development, crude oil exports at current levels would not be possible, as domestic consumption would absorb all production. The growth of the gas industry has increased production and expanded distribution across the country.

One of the biggest challenges facing Iran’s oil and gas industry is the lack of effective engagement with the global market. The industry, which includes oil, gas, and petrochemicals, has been directly impacted by sanctions, leading to reduced foreign investment, limited technology transfer, and restricted access to equipment. As the world’s second-largest holder of gas reserves and one of the largest holders of oil reserves, Iran has yet to achieve its true position in the global market.

We could have played a more significant role in shaping global energy policies. To reach our rightful position in global markets, we need an estimated $250 to $300 billion in investment. However, even if domestic funding is secured, without access to technical expertise, modern equipment, and advanced project management, progress will remain limited.

The entry of major international oil companies and foreign technology is essential for the development of Iran’s oil and gas industry.

Prioritizing projects, focusing on productivity, optimizing domestic consumption, and maximizing capacity utilization are part of the solution. However, without the return of international engagement and foreign investment, the sustainable development of Iran’s oil industry will remain a significant challenge.

Concluded