Hamid Mollazadeh
Tehran is attempting something it has struggled with for decades: unclogging the bureaucratic arteries of its oil industry.
In a new performance report covering the first 16 months of Iran’s 14th administration—in office since July 30, 2024—the Oil Ministry has laid out an ambitious restructuring of how upstream oil and gas projects are financed, contracted and executed.
The centerpiece of that reform is blunt and measurable: cutting the time required to conclude oil contracts to a maximum of six months.
For an industry long burdened by multilayered approvals, overlapping oversight and complex state ownership structures, that six-month ceiling marks a structural shift rather than a cosmetic tweak.
Oil experts in Iran have consistently argued that investment facilitation is a prerequisite for economic growth. In the hydrocarbons sector, however, the combination of sovereign ownership, regulatory scrutiny and geopolitical risk has historically translated into drawn-out contract negotiations.
According to the ministry’s report titled “Performance of the 14th Administration in 1404,” the new framework replaces what were often multi-year processes with a defined and time-bound structure.
The reform aims to standardize documentation, streamline approvals and create financial pathways capable of attracting both institutional and retail capital.
At the heart of the overhaul is a newly approved upstream financing directive. The mechanism opens the door to a range of capital-market instruments, including sukuk (Islamic bonds), project funds, crude oil commodity deposit certificates, oil delivery warrants and payment commitment certificates.
This shift reflects a broader strategic recalibration: moving part of upstream financing away from purely state-backed balance sheets toward hybrid capital-market models.
Project Companies and Retail Capital
One of the most notable innovations is the formal embrace of “project companies” under Articles 12 and 14 of Iran’s Seventh Development Plan.
These entities are designed to ring-fence individual upstream projects, allowing targeted capital raising and clearer risk allocation.
A flagship example involves MAPNA Oil and Gas Development Co., which is in the process of establishing a project company to finance a 40,000 bpd skid-mounted crude processing facility.
The plant will serve the Qal’eh Nar, Kaboud and Balarud oilfields under a Build-Own-Operate (BOO) structure. Total investment stands at $102 million and the project company is being registered with Iran’s Securities and Exchange Organization.
The structure is explicitly designed to attract small-scale investors, effectively opening upstream participation to a broader segment of domestic capital.
For a sector traditionally dominated by state entities and large quasi-governmental firms, this represents a cultural as well as financial pivot.
A New Investment Showcase
The government also staged what it called a “Transformation in Investment and Development in Iran’s Upstream Oil and Gas” event—effectively a public-facing investment roadshow.
More than 1,500 domestic and international investors attended, with over 200 investment opportunities presented. During the event, Iran issued its first $104 million payment commitment certificate, signaling the operationalization of its new financing toolkit.
In parallel, a dedicated Oil Industry Guarantee Fund was launched with initial capital of $320 million. The fund is intended to provide independent financial backing for upstream oil and gas projects, mitigating credit risk and enhancing bankability. For Tehran, this is economic diplomacy as much as financial engineering.
Billions in Contracts and Field Development
Beyond structural reform, the report details substantial contractual momentum. Since the start of the current administration, 10 upstream contracts have been finalized with a combined investment of nearly $14 billion. These projects cover the development of 13 oilfields as well as Phase 11 of the South Pars gas field.
In addition, five new contracts worth more than $12 billion are in the ratification stage for further oil and gas field developments.
The National Iranian Oil Company (NIOC) has also signed 30 memorandums of understanding and confidentiality agreements with Iranian and international firms aimed at preparing future development plans.
Domestic manufacturing capacity remains a parallel priority. NIOC signed 18 “first-time manufacturing” agreements with knowledge-based companies and 10 supply contracts in the southern oil-rich regions valued at more than $1.25 million.
Key memorandums include a $450 million agreement for development of the Khayyam gas field, contracts for the Gardan and Pazan gas fields, and a $200 million enhanced oil recovery MoU for the Paranj oil field.
The most consequential announcement, however, concerns South Pars—the giant offshore gas field shared with Qatar and the backbone of Iran’s gas supply.
In March last year, Iran signed $17 billion worth of contracts for pressure-boosting and production maintenance at South Pars.
The agreements, split across seven separate contracts, were awarded to top-tier domestic contractors with prior experience in the field.
The scale is staggering. Iranian officials project cumulative revenue of $780 billion through 1430 in the Persian calendar (roughly 2051/52), largely from condensate and byproducts generated by the pressure-boosting initiative.
More than 70% of the project’s equipment is expected to be sourced domestically. At peak construction, employment is projected at 17,000 direct jobs and 50,000 indirect positions.
Structural Reform Under Sanctions Pressure
All of this unfolds under continuing sanctions pressure and constrained access to global capital markets. That reality shapes both the urgency and the architecture of the reforms.
By compressing contract timelines, introducing capital-market instruments and institutionalizing project companies, Tehran is attempting to reduce friction costs within its own system—a lever it can control even if sanctions remain.
Whether these reforms translate into sustained capital inflows and accelerated production growth will depend on execution discipline and geopolitical variables beyond Tehran’s control.
But one conclusion is unavoidable: Iran is not waiting passively for external conditions to shift. It is retooling its upstream investment machinery from within—and doing so with figures large enough to demand the oil market’s attention.
