After the sanctions: Policy challenges in transition to a new political economy of the Iranian oil and gas sectors

Abstract

This article discusses the prospects of Iranian domestic energy sector by focusing on the latest political and economic developments taking place in connection with the hydrocarbon industry. Although after partial lifting of the sanctions, substantial changes in the Iranian energy sector may present a new, favorable environment for international investments, the political economy of hydrocarbon management in Iran plays a significant role in the definition of current and prospective stakeholders, their aims and interests. This paper analyses existing policies and policy challenges of hydrocarbon management by contextualizing them with historical and political factors. Considering the recent prospects in the Iranian hydrocarbon sector, it is worth keeping only the lower expectations concerning the production boom of the Iranian hydrocarbon industry: due to external market trends (low oil price, oversupply in the market) and a long redistribution process, the most probable scenario proposes a slow and continuous transformation in the oil and gas sectors of the Islamic Republic. In practice, it means that both the extension of export capacity and the involvement of international companies will take place in a gradual, regulated way, in which all the interests of major Iranian political and economic stakeholders have to be considered.

A Review on Energy and Renewable Energy Policies in Iran

“…We can conclude that Iran has a significant potential capacity for crude oil and natural gas reserves, its transport and storage. It can increase the weak flexibility of the energy system by constructing more transition lines and braking swap with its neighbors [25]. This makes a significant contribution to the export and transport of crude oil regionally and internationally.…”

Investigation of the Optimal Model for the Development of Renewable Energy in Iran using a Robust Optimization Approach

“…In a study researchers examined the integration of CCS technology, emissions trading, and fuel price volatility for sustainable energy planning using a robust optimization approach [24]. In a study, a technique for planning power systems at the regional scale and carbon dioxide management" of the basis-based optimization method for planning energy systems and carbon dioxide trade in the framework of parametric-base combinations optimization has been used in conditions of uncertainty [25]. In a study researchers used the robust optimization technique for planning energy systems and the management of CO2 emissions in China by combining two parametric programming techniques -baseline and robust optimization [26].…”

Oil price and urgency towards economic diversification through effective reforms and policies in Caspian Basin

“…Unfortunately, the region is building toward a new spiral of geopolitical competition. Various researchers have discussed this geopolitical issue (see Tsantoulis, 2009;Rywkin, 2010;Aburas and Demirbas, 2015;Pleines and Wöstheinrich, 2016;Batsaikhan and Dabrowski, 2017;Bayramov and Abbas, 2017;Dudlák, 2018;Su, Qin, Tao, and Moldovan, 2019).…”

“…Another factor in the first and second quarter of 2019 was the decline of net capital outflows from the private sector by US$13.4 billion to US$0.5 billion and have decreased substantially further in the third quarter due to geopolitical tensions. FDI also has dropped rapidly from US$54.5 in 2011-2013to US$19.2 billion in 2015-2018 This decline highlighted that 61.5% of inward FDI was mainly from the minerals and extraction sectors, whereas the outflows also had a huge drop due to limited destinations (World Bank, 2019a).…”