Iran, Islamic Republic of

Iran is a vocal OPEC member and the fourth biggest oil exporter in the world, exporting 2.4 mb/d. Europe and Asian countries, notably China, India and Japan, are the main export markets. Tehran also plans to boost the production of natural gas and LNG, having recently signed several export deals with Asia, European and neighbouring countries. The development within the sector has nevertheless been slow for several reasons. Western companies have showed signs of reluctance to invest in the country as long as Iran is subject to international sanctions. Iran is since 1996 subject to Washington’s Iran Sanctions Act, which forbids large-scale foreign investment in the country’s petroleum sector. Further sanctions have been imposed on Iran for its alleged nuclear programme.

The domestic consumption of gas is suspected to increase rapidly over the next decade. The country has plans to double the electricity generating capacity, re-inject large volumes in the oil fields, and to incrementally replace gasoline fuel with gas. Fuels in Iran are heavily subsidized. Due to a lack of refinery capacity, importation of gasoline and other fuels makes a heavy burden on governmental budgets. The election of president Mahmoud Ahmadinejad 2005 has been followed by changes within the country’s petroleum sector. Key personnel in the National Iranian Oil Company (NIOC) and the Ministry of Petroleum have been replaced, and the NIOC monopoly on production and marketing has been challenged by other institutions.