Sajad Khalili, the deputy oil minister for hydrocarbon resources, stated that amending the financial terms between the government and NIOC, as outlined in Article 15 of the Seventh Development Plan law, is an unavoidable necessity. He said the change is critical to maintaining and increasing oil production ceilings and preventing the erosion of the company's investment capacity.

"Global energy market dynamics are rapidly changing, and oil no longer holds its absolute former status," Khalili said in an interview with the Shana news agency. He cited the growth of renewable energy, the development of unconventional oil sources and improved energy efficiency as key challenges to the traditional oil market.

He added that sanction pressures recall the difficult years following the nationalization of the oil industry and Western pressure in the early 1950s.

Investment Needed to Counter Natural Production Decline

Khalili pointed to a technical review of 101 active oil and gas fields, which shows that about 70% of Iran's oil reserves will reach mid-life within five years. This signals a natural decline in production capacity, necessitating extensive investment and implementation of enhanced recovery techniques.

"Without sufficient investment, even maintaining the current production level will be difficult," he said. "Investment and increased production are not a choice, but a national imperative."

He stated that NIOC's current financial structure makes it impossible to achieve these goals, primarily because the rules for sharing the benefits of oil and gas production among stakeholders have not been reformed.

NIOC's Real Share is Half its Nominal Share

Khalili said that while NIOC's nominal share from the sale of crude oil and gas condensates has been set at 14.5% in annual budget laws over the past 15 years, its real share has fallen to less than 8% after accounting for hidden subsidies to domestic industries.

For instance, he said, NIOC's share from subsidy reforms dropped from 34.8 quadrillion rials in the Iranian year 1402 (2023-24) to 5 quadrillion rials in 1404 (2025-26), nearly eliminating a major source of financing.

Furthermore, the company's share from oil and gas products was reduced from about 7.4 billion euros in 1403 (2024-25) to 5.73 billion euros in the 1404 (2025-26) budget law.

"This gap between the nominal and real share has imposed severe financial constraints on NIOC, creating a deadlock for any enhanced recovery and development," Khalili said.

From Past Efforts to Article 15

Khalili explained that efforts to increase NIOC's share since 2019 were unsuccessful due to opposition from some stakeholders. However, the inefficiency of the old system and a mandate for transparency in state companies' finances led the government to propose Article 15 in the Seventh Development Plan bill, which was approved by parliament.

The Oil Ministry of the current government has welcomed Article 15. An executive bylaw was prepared and approved by the cabinet this fall.

"Expert calculations indicate that to achieve a production target of 4.58 million barrels per day, NIOC's share must increase from the current 8% to about 22%," Khalili said. This increase would resolve the company's financial problems and allow it to finance development projects, meet commitments to contractors and begin new investments.

Proposed Scenarios for Implementation

Khalili's office is optimizing two scenarios to implement the bylaw:

1.  Signing long-term IPC-style contracts between the Oil Ministry and NIOC for fields that currently lack contracts. In this model, all of NIOC's costs would be covered, and its share would depend on the field's development costs.

2.  Signing long-term production sharing agreements for active fields. This model would direct part of each field's revenue back into its own development, creating more incentive for investment and increased production.

Khalili concluded that it is clearer than ever that achieving oil production targets is impossible without changing the financial rules.

"If NIOC's real share is reformed, more investment, increased recovery from reservoirs and the realization of production goals will be possible," he said. "This action guarantees the future of the oil industry, the country's energy security and the interests of future generations. Otherwise, as in past experiences, all stakeholders will be harmed."