The Iran oil and gas exploration and production market is expected to grow at a CAGR for crude oil and natural gas production at almost 2% over the period of 2020-2025. Factors such as efforts to attract foreign investment through the Iranian Petroleum Contract (IPC) along with new oil & gas discoveries in the country’s territory are expected to drive the oil & gas exploration and production market in the coming years. Moreover, Iran’s natural gas production has boomed with several upcoming export projects which are expected to drive the market. However, geopolitical factors and national unrest in the country are expected to restrain in the exploration and production market.

  • Iran plans to improve its production capacity of crude oil and natural gas with the development of the Azadegan, Yadavaran, Yaran, and South Pars oil layer, as well as several other fields, including the Caspian Sea resources. Through the development of such fields, the country is planning to attract new investors, and oil companies to invest in the upstream sector of the country.
  • Iran is producing relatively less crude, mainly due to the tension with the United States, owing to the US-Iran nuclear deal. As a result of these tensions, the United States has put sanctions on the country, which has had a two-fold effect on the country’s oil and gas industry.



Key Market Trends

New Discoveries and Upcoming Projects are Expected to Drive the Market

  • More than 80% of Iran’s active oil fields are old and lose about 8-12% of their production capacity annually. In order to address this issue, Iran is conducting exploration for hydrocarbons of about 60% of its territory, including where, until recently, such searches were considered unpromising.
  • In December 2018, the National Iranian Oil Company (NIOC) has announced the discovery of more than 40 new oil and gas fields and are expected to start their development in the near future. As many as 14 blocks of newly discovered hydrocarbon deposits are ready for tender.
  • The officials of NIOC have stated that preliminary surveys of exploration department show that oil and gas fields can be found in the Bostanabad and Miyane regions in the province of East Azerbaijan.
  • In addition, in the province of Ardabil, a promising area of Mogan was identified, where pilot hydrocarbon production is already underway.
  • Some of the notable upcoming upstream oil and gas projects include the development of the Nahr Bin Umar and Artawi oilfields, South Yaran field, South Pars Oil Layer, and Azadegan oil field. Therefore, factors such as new oil & gas discoveries across the nation coupled with upcoming E&P projects are expected to drive the market studied during the forecast period.



The United States Sanctions on Iran

  • The sanctions have affected the upstream investment in both oil and natural gas projects. As a result, during 2017-2018, crude oil production, crude oil exports, and well completion activity registered a decline.
  • The majority of the international oil companies are from Europe and the United States. Owing to the sanctions from the United States, companies either cannot or refrain from investing in the oil and gas sector in the country.For instance, major foreign players like ExxonMobil, Total and Lukoil have either pulled out or have put on hold the investments in oil & gas sector.
  • It was expected that, despite the sanctions, the Chinese and Indian companies would continue their operations, as these countries are major oil and gas importers from Iran and hence, have vested interests in continuing operations in the country. But the major Chinese company, China National Petroleum Corporation (CNPC), has also withdrawn its investments in phase 11 of South Pars gas field.
  • Therefore, international sanctions that targeted the country’s oil exports, hindered progress across the country’s energy sector.



Competitive Landscape

The Iran oil and gas exploration and production market is consolidated. Some of the key players in this market are National Iranian Oil Company, Pars Oil and Gas Company, and National Iranian Gas Company.

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