Energy Diplomacy and the Formation of a “Resistance Economy” in Iran

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Introduction

Iran has historically been one of the world’s key oil producers. However, individual, regional, and international sanctions imposed against Iran have significantly impacted its economic development (Ghanbarloo, 2022). Nevertheless, the Islamic Republic of Iran (IRI) has continued to take active steps to diversify its economy and strengthen its energy independence.

In the aftermath of the Islamic Revolution of 1979, Iran sought to preserve its sovereignty and integrity by following the “doctrine of resistance” of Ayatollah R.M. Khomeini.  It is important to note that Iran’s foreign policy is directed by the Supreme Leader (Rahbar) of the Islamic Republic, who emphasizes adherence to the values and principles of the Islamic Revolution, as well as active resistance to external domination (Mehdipour, 2020). Under unilateral U.S. sanctions targeting Iran’s energy sector (Belov & Ranjbar, 2023), a key milestone was the adoption of the strategic document “Vision of the Islamic Republic on the Horizon of 2025” in 2005, signaling Iran’s ambition to become a regional power (Polishchuk, 2007).

In 2013, the IRI shifted its focus towards building a “resistance economy,” aimed at maximizing the potential of domestic growth drivers in the real sector.¹ This essentially involved relying on the domestic market,  with growth driven by industries focused on the deep processing of hydrocarbons and other natural resources, as well as high-tech industrial sectors with an export orientation (Yurtaev, 2017, pp. 222–223).

Against this backdrop, Iran’s energy diplomacy began to take shape, centered on its oil and gas sector, which is regarded as a cornerstone of sustainable energy and economic growth. Another critical aspect of Iran’s  energy diplomacy is its focus on forging international partnerships in this field, particularly with non-Western countries  such as Russia (Islami, 2012, p. 191). However, energy diplomacy in Iran is not yet a fully formed or cohesive strand of its foreign policy. By the 2020s, the leadership of the IRI had begun to frame energy diplomacy within the context of regional policy priorities, necessitating the alignment of sectoral and geopolitical interests.

The study’s methodology employs a comprehensive approach, given the multifaceted nature of the subject and the need to analyze  the current state and prospects of the oil and  gas sector as a foundation for the “resistance economy” and Iran’s emerging energy diplomacy. Adopting a problem-chronological framework and comparative analysis, the research examines production, export, and investment data to reveal the interdependence of international sanctions and political decisions, which critically shape the development of Iran's oil and gas sector and the formation of the IRI’s energy diplomacy.

The term “energy diplomacy” has not yet been defined in the scientific literature. Russian scientists have proposed to understand  energy diplomacy as the practical activities  of foreign policy, foreign economic and energy departments together with national  companies to implement foreign energy policy aimed at protecting and upholding national interests in the field of production, transportation and consumption of energy resources.² Iranian scientists, meanwhile, define it as “the practical activity of foreign policy, foreign economic and energy departments, in some cases jointly with companies, to implement the country's foreign policy in the field of energy.” Energy diplomacy is designed to ensure the long-term cooperation and strategic expansion of international cooperation in the energy sector, acting as a tool to promote and support multilateral investments in the field of production and trade within the framework of international cooperation (Ebrahimitorkaman, 2024, p. 17).

The study highlights the crucial role of energy diplomacy in shaping Iran’s holistic economic development strategy, which focuses on the aspect of establishing international partnerships, which will bring Iran to the forefront in the field of global innovative energy solutions, contributing to economic growth and stability in Southwest Asia.

Special attention is paid to strategic decisions aimed at improving the efficiency  and sustainability of the oil and gas sector, expanding opportunities for international cooperation, reducing the dependence of the Iranian economy on oil revenues by increasing added value and introducing innovative technologies. As noted in the study,  Iran’s energy cooperation with Russia can become a catalyst for economic growth and stability in the region. In turn, the development of the strategic dialogue between Iran and Russia in the oil and gas sector marks  a significant shift towards the creation of  a multipolar energy world. This transition has the potential to change the configuration of global alliances and energy policies, thereby impacting global energy security and geopolitics in the long term.

Iran’s International Positioning  and Development Strategy

The key strategic challenges facing the Islamic Republic of Iran are centered around the issue of its preservation “as a sovereign and integral Islamic state, one of the natural leaders of possible Islamic integration” (Lunev & Yurtaev, 2022, p. 184). It has been 18 years since the adoption in 2005 of the most important long-term strategic documents in the history of Iran: the Vision of the Islamic Republic on the Horizon of 2025.³ The adoption of such an important and ambitious strategic plan as the main goal was to transform Iran into a powerful regional power with claims to be the leader of the Islamic world (Yurtaev, 2009). According to this goal, by 2025 Iran was supposed to become one of the developed countries of the world, becoming the first number in the list of Southwest Asian states in terms of economic, scientific and technological power.⁴ At the same time, Iranian strategists reaffirmed their commitment to preserving the Islamic order in the country based on the principles of the 1979 victory in Iran. The Islamic Revolution aimed at shaping the world Ummah (Pax Umma Islamica). In the current, second stage of the Islamic revolution, which has been going on since 2019, one of Iran’s top priorities is to promote the Pax Umma Islamica pan-Shi’ite project in Southwest Asia (Lunev & Yurtaev, 2022, p. 177; Mostageran, Gabdullin & Rozhenko, 2023, pp. 230–231).

It should be noted that the real implementation of the set goals turned out to be a challenging task. Already during the first five-year plan, the Iranian government failed to achieve any breakthroughs, which was largely due to the global financial crisis and the subsequent financial and economic recession. Of course, the sanctions policy of Western countries, especially the unilateral sanctions imposed by the United States, the European Union and Japan, had a serious deterrent  effect (Sadeghi, Firoozabadi Dehghani &  Ajili, 2018, р. 95). So, for example, only because of the impact of US sanctions  from 2018 to 2021 Iran lost USD 1 trillion, including USD100 billion from the oil blockade.⁵ As a result, Iran, one of the key members of the Organization of Petroleum Exporting Countries (OPEC), found itself facing a lack of investment in its energy industry due to new anti-Iranian sanctions packages, while exports of Iranian crude oil were limited by the United States’ policy of maximum pressure under President Donald Trump (Mamedova, 2023; Karimipoor, 2021). On September 5, 2013, under increasing sanctions pressure, Iran’s Rahbar Ayatollah Ali Khamenei called on the government to build a “resistance economy” in response to sanctions and foreign policy pressure.⁶

Iran’s Oil Sector Development Strategy and A. Khamenei’s Position

In a series of speeches in 2013–2016, Iran’s Rahbar Ali Khamenei set out a detailed plan for developing the country’s oil industry, emphasizing the need to adhere to the principles of economic diversification and sustainability. This approach demonstrated a strategic shift in the views of Iran’s top leadership on the development of the country’s oil potential. In his speech on September 5, 2013, A. Khamenei stated that the vulnerability of the Iranian economy was unacceptable due to its heavy dependence on oil, and that the economic difficulties that were increasing due to external sanctions pressure (Naserpoor & Fazlolahtabar, 2021, p. 68).

On February 18, 2014, the “Fundamentals of the Resistance Economy Policy” were officially unveiled, which set out the tasks of increasing strategic oil and gas reserves (paragraph 14) and adding value added by completing the value chain in the oil and gas industry (paragraph 15).⁷ On February 20, 2014, A. Khamenei identified oil dependence as a critical problem and the seventh main factor in building a “resistance economy” in Iran.⁸ On June 14, 2016, he noted the importance of a high level of oil production and exports for the economy, stressing the need to convert oil and gas into more valuable commodities. At a meeting with the government on August 26, 2017, the Rahbar said that the “oil and rentier economy” needed to be changed to a “productive and popular economy,” said the Rahbar at a meeting with the government on August 26, 2017.⁹

Adopted on June 22, 2017, the National Strategic Energy Document defined Iran’s strategy for action in the oil and gas sector for the first time, which was aimed at optimizing operations and increasing overall efficiency in the oil and gas sector by focusing on infrastructure modernization and advanced technologies. It was emphasized that all the guidelines of the Strategy are aligned with international standards and the instructions of the Iran’s Rahbar. The environmental orientation of the document was also noted, which prioritized sustainable development so that Iran, while minimizing its environmental impact, would contribute to global efforts to achieve a “greener energy future.” The importance of forming international partnerships and attracting foreign investment was emphasized not only for the development of the national economy, but also for diversifying and strengthening Iran’s role in the global energy market. This comprehensive approach was expected to ensure the sustainability and long-term competitiveness of Iran’s oil and gas sector.¹⁰ The new approach to oil resources developed in Iran meant not only an awareness of the limitations of oil resources, but also, in a broader meaning, an understanding of the inevitability of a global shift towards sustainable energy.

In 2019, A. Khamenei recognized the Iranian economy’s dependence on oil as  one of its most important shortcomings. On  11 February 2019, he made this statement in a speech delivered to mark the 40th anniversary of the Islamic Republic of Iran. In this program address to the Iranian people, which became known as the “Second Step,” A. Khamenei noted that the stage begun in 1979 had ended, and that the Islamic Revolution had entered its second stage — “self-development, formation of society and civilizational construction” —  on the way “to the great goal, which is to create a new Islamic civilization.”¹¹  Based on the strategic vision formulated in the speeches of Iran’s Rahbar, an action program was developed that includes a number of targeted initiatives to expand Iran’s position in the global energy market (energy diplomacy) based on its regional advantages (geopolitics) while paying attention to domestic needs (economy) (Ashrafi & Rouhani, 2021, p. 137).

In general, the energy policy developed in Iran, which Rahbar called for in the oil and gas sector, assumes the following:

• expansion of oil and gas exploration to gain full knowledge of the country’s resources,
• the increase in oil production capacity is proportional to the existing reserves and the growing economic, security and political power of the country,
• the increase in gas production capacity is proportional to the country’s reserves to ensure domestic consumption and maximum substitution of petroleum products,
• expansion of fundamental and development research and training of the workforce, as well as efforts to establish a center for the import and export of energy technical knowledge and services at the international level and the promotion of technologies in the field of resources, oil, gas and petrochemical industry,
• implementation of efforts to attract the necessary financial resources (domestic and foreign) in the field of oil and gas production in legally permitted industries,
• the use of the country’s regional and geographical location for the purchase, sale, processing, exchange and transportation of regional oil and gas to domestic and global markets,
• optimization of consumption and reduction of energy intensity,
• substitution of income from the export of oil and gas with income from the export of petrochemical products.¹²

In 2021, the Iranian government’s Strategic Approach to the oil sector was formed, which was outlined in the 2022 report on the activities of the 13th Government at the Ministry of Petroleum. This document highlights the following critical areas of long-term planning and captures Iran’s current achievements.

1. Strategic development and efficiency improvement of the oil sector: the government’s role in the strategic planning and development of the oil sector has been strengthened based on an integrated approach to its modernization and adaptation to global energy trends, which gives it greater organizational efficiency and effectiveness.
2. Significant financial contribution to the budget and export performance: The 1400 (2021/2022) fiscal year was marked by outstanding financial achievements:  the contribution of the petrochemical  sector to exports amounted to about USD  14.3 billion. This indicates a strong export potential and a significant contribution to meeting the country’s needs in foreign currency (about 24%).
3. Product diversification and capacity increase: the introduction of 20 new types of products and a marked focus on increasing nominal capacity, as well as know-how for processing methanol into propylene, reflect a strategic step towards diversification. This implies a transition from traditional petroleum products to derivative products with higher added value, which meets the requirements of the global market.
4. Effective export management and monitoring: The establishment of a special monitoring group to manage petrochemical exports and related foreign currency receipts has highlighted a rigorous approach to export management. This is crucial for redirecting the significant revenue generated into the national economy.
5. Innovative financial management and the use of the barter system: the government’s successful handling of financial issues, including facilitating the repayment of financial obligations and the introduction of a barter system for petrochemical products, demonstrates innovative financial management strategies in the oil sector. These strategies  are especially important for products that  do not generate income directly in foreign currency.¹³

The report also highlighted important projects and the government’s commitment to expand petrochemical production through projects such as the Ibn Sina Petrochemical  and the Arya Polymer Homein Polypropylene. At the same time, the government has focused on diversifying petrochemical products,  as can be seen in the example of the  Arta Energy project, which focuses on  production, including urea-formaldehyde and melamine-formaldehyde. This diversification strategy aims to expand the value chain  and meet the diverse needs of the market  both within and outside the country.  There have been efforts to improve logistics infrastructure, including reconstructing  ports in Asaluya and Mahshahr, and creating new docks for exporting petrochemical products. The mentioned areas of activity demonstrate the complexity of the approach to developing and strengthening of the international competitiveness of the oil sector, which provides a significant and sustainable contribution to the national economy through diversification, capacity building, effective financial management, the development of petrochemical infrastructure and production facilities.¹⁴

The budget bill for the Iranian year 1401 (March 2022 — March 2023) presented by President E. Raisi to Iran’s Majlis (the Parliament) demonstrates that Tehran does not expect a positive resolution regarding the Joint Comprehensive Plan of Action (JCPOA) revival and is basing its financial plans primarily on countering U.S. sanctions. The draft budget is based on the oil price of USD 60 per barrel.  For comparison, in 2021–2022, the budget plan was based on the calculation of oil prices  in the region of USD 40 per barrel. According to the project document, in 2023, Iran  planned to sell about 1.5 million barrels per day abroad. However, U.S. sanctions prevented the Iranian authorities from carrying out their  plans — the volume of supplies turned out  to be less than 1 million barrels per day (Karimipoor, 2022, p. 43). Despite continued pressure from external restrictions, Tehran has continued to diversify its oil markets by strengthening ties with countries such as China, India, and some African and Latin American states.

However, according to the program of the Ministry of Oil of the 14th Government, published on July 31, 2024 (May 10,  1403 according to the Iranian calendar), Iran’s oil exports for the period up to June 30,  2024 (April 10, 1403 according to the Iranian calendar) amounted to 1,547,000 barrels  per day,¹⁵ which indicates that the target indicators have been achieved with some delay. This result indicates a gradual stabilization of Iranian oil exports, despite the challenging international situation and the stability of the country’s economic strategy in the face of sanctions.

Energy Diplomacy

The formation of energy diplomacy as a distinct field of activity within the framework of the official diplomacy of the Islamic Republic of Iran occurred in the late 1990s. However, a full-fledged framework for its effective functioning was not established until the 2020s (for more information, see: (Belov, 2024,  pp. 77–81; Purahmady & Zulfiqari, 2010; Kipoor & Izadi, 2010)). Iranian energy diplomacy is aimed at achieving two goals through international cooperation — sectoral and general policy (Hossein Adeli, 2010, p. 59). It is formed within the framework of the interaction of the Ministry of Foreign Affairs (in terms of international support for foreign economic activity, including information and political aspects) with relevant Iranian companies, but the decisive word remains with the Ministry of Oil of Iran (Ajili & Askari Vajedi Roshan, 2014, p. 101). Indeed, the Iranian Foreign Ministry and the Ministry of Oil simultaneously implement two goal-setting logics (based on functional responsibility) — ensuring the national (geopolitical) and price (economic) interests of the country, respectively, and the state’s position depends on the balance of departmental potentials (Belov, 2024, p. 78).

In the 1980s and 2010s, Iran was solving the priority task of breaking through international isolation and overcoming sanctions pressure. The Iranian leadership therefore viewed the country’s positioning in the global energy market through the prism of Iran’s geopolitical interests and its influence in the region of Southwest Asia and the world  as a whole (Ghanbari, 2018). Since 2020,  there has been a desire to achieve greater interconnectedness between the spheres of foreign policy and foreign economic activity within the framework of a holistic strategy of action to promote Iran’s national interests in the world (Razavi, 2022, p. 228). A possible  way to increase the effectiveness of energy diplomacy is to create an interdepartmental commission on energy diplomacy with the participation of the Ministry of Foreign Affairs, the Ministry of Oil, the Ministry of Economy and Finance, as well as the Ministry of Industry, Mines and Trade of Iran (Baskakov & Krylov, 2023).

Among the industry’s goals, establishing Iran as a leader in innovative global energy solutions is considered significant. This involves ensuring a new balance between traditional oil exports and innovative  energy solutions, attracting technological investments and shifting the profile of  energy exports. Iran aims to create a balanced energy market in Southwest Asia and related regions, which in a situation of global uncertainty makes Iran a significant element of the emerging new global energy security system.¹⁶ According to this logic, energy diplomacy can “come out of the shadows” and become a national action strategy, but so far this process remains latent, which is largely due to the unresolved problem of interdepartmental disunity and the complex interweaving of connections and interests of the structures involved in energy diplomacy (Kipoor & Izadi, 2010, р. 151).

In the context of developing energy diplomacy, Iran’s initiative to establish the Shanghai Energy Regional Hub (2023) should be noted in order to trade, exchange energy and ensure energy security, including fossil fuels, electricity and renewable energy, and a fund for joint financing of petrochemical projects. Iran has also expressed its readiness to become a center for providing engineering and technical services and producing equipment for the oil, gas and petrochemical sectors.¹⁷

In 2013, Iranian experts considered various scenarios for oil production and consumption in the country. For example, in the optimistic scenario proposed by the Research Center of the Mejlis of Iran, annual investments of USD  4.5 billion were expected in the exploration and development of oil fields in order to avoid a decline in exports. Experts have noted  that the best approach for Iran is to develop its domestic energy and non-oil economy  and increase oil exports (Abbaszadeh et al., 2013). Oil production in 2022 (the latest available data) increased to 3.82 million barrels per day, providing production of 176.5 million tons by the end of the year.¹⁸ However, in the following years, Iran faced a number of challenges related to both external sanctions and the need to modernize its oil production infrastructure. The reality is that Iran’s refineries are still unable to meet domestic needs. Therefore, before planning the  optimal use of petroleum products, it is necessary to achieve the ideal level of oil production in Iran (Razavi, 2022, p. 231). In the process of optimizing oil production, investments can be a crucial factor. In 2011, it was estimated that more than USD 500 billion would be needed to invest in the oil industry by 2025, 70% of which (USD 350 billion) was planned to come from foreign investment Abbaszadeh et al., 2013, p. 621).

Oil Exports as the Basis  of Iran’s Economy

The National Iranian Oil Company (NIOC) is a state-owned national producer and distributor of oil and natural gas. Founded in 1948, it is subordinate to the Ministry of Oil and Gas of Iran. NIOC ranks as the world’s second largest oil company after Saudi Arabia’s  state-owned Saudi Aramco. It is solely responsible for the exploration, drilling, production, distribution and export of crude  oil, as well as the exploration, production and sale of natural gas and liquefied natural gas (LNG) (Saeedi, 2020, p. 9). The company exports surplus products in accordance with commercial considerations set by OPEC and at prices prevailing in international markets. In order to develop investments in the Iranian oil and gas industry, NIOC creates joint ventures with the world’s leading oil and gas corporations, including: Shell, Total, Eni, PETRONAS, China National Petroleum Corporation (CNPC).¹⁹

Iran is one of the founders of OPEC and a major player in the global oil market. The growth of oil production in Iran is not limited by OPEC quotas, with production reaching  3.1 million barrels per day in November 2023.²⁰ As previously mentioned, the Islamic  Republic of Iran is currently under U.S. sanctions, which explains the absence of a quota for Iran. Despite the restrictions, Iran continues to direct budget funds to the oil sector, both in field development projects and in the petrochemical industry, and thus Iran,  along with other OPEC members, continues to ensure stable and reliable oil supplies to consumers around the world (Hafner, Raimondi & Bonometti, 2023, p. 71). From May to November 2023, Iran increased oil  production by 421 thousand barrels per  day,²¹ demonstrating the country’s ongoing commitment to developing and expanding the oil sector despite ongoing external constraints.

It is important to note that on June 30, 2024 (April 10, 1403 according to the Iranian calendar), according to the report of the Ministry of Oil of the Pezeshkian’s government, oil production amounted to 3.4 million barrels per day,²² which can be considered as a sign of the relative stability of the industry and the gradual recovery of production levels after a period of recession associated with political and economic uncertainty. This also indicates  that, despite ongoing external challenges, the country is moving towards achieving its oil and gas goals.

 Production statistics by year (in 2012–2022) ranged from 144.4 million tons in  2020 (minimum value) to 231.9 million tons in 2017 (maximum value). The main reasons  for the decline in production during this  period were the Coronavirus pandemic and sanctions.²³

In May and June 2023, Iran exported  1.6 million barrels of oil per day, which was more than double the level for the same period in 2022. Exports increased to the maximum in August to 1.8 million barrels per day. The minimum volumes were observed in February-March 2023 and amounted to 1.3 million barrels per day.²⁴ However, statistics show that even if there are internal difficulties in 2024, including the tragic accident in which President Ebrahim Raisi, as well as the ongoing external pressure and sanctions, Iran’s oil exports for the period up to June 30, 2024 (April 10, 1403 according to the Iranian calendar) amounted to 1,547,000 barrels per day.²⁵ This indicates that the country is maintaining stability in its oil sector and has the ability to recover and develop, even in conditions of political instability and increased international opposition.

By the end of 2023, Iranian oil flows had decreased. China has become the main importer. In May 2023, Beijing directly imported 359,000 barrels per day of Iranian oil, which was almost 100,000 barrels more than in May 2022. However, according to informed industry sources, the actual volume of oil exported from Iran to China is much higher, as official statistics do not account for oil transiting through other Asian and Middle Eastern countries.²⁶

China, India, Syria and Venezuela are not complying with U.S. sanctions on Iran’s oil industry, and a number of Latin American and African countries may also join them. Iran is able to rapidly increase its of oil and condensate exports to 3 million barrels per day, but there are no production facilities to increase imports.²⁷

About 40% of Iran’s income comes from oil. In some years, the share of income was 50%. The construction of oil refineries and petrochemical plants of various capacities has become an effective means of countering the “oil” sanctions. While the share of crude oil in total exports was 86.5% in 2007–2008, before the introduction of the international sanctions regime but with sanctions imposed by the United States, it more than halved to 42.2% in 2020–2021. At the same time, the share of the oil industry in gross domestic product (GDP) decreased slightly, from 10 to 8.6%, and in non-oil exports in 2018–2019, petroleum products accounted for more than 52% (Baskakov & Krylov, 2023, pp. 50–51).

To expand oil exports and overcome the embargo, three consortia comprising up to  250 private local companies have been established in Iran. In April 2013, the  Iranian parliament approved a bill allowing the private sector to sell up to 20% of the country’s total oil exports, which is about 400,000 barrels per day. According to the existing  agreement between the Iranian Oil Ministry and the Union of Exporters of Oil, Petroleum Products and Gas of the country, the Union should look for sales markets that are not covered by the Ministry.²⁸

Iran has 9 large state-owned petrochemical plants located in Abadan, Isfahan, Bandar Abbas, Tehran, Arak, Tabriz, Shiraz, Kermanshah and Lavan. These plants produce gasoline (33.9%), fuel oil, gasoline (27.8%), kerosene, liquefied gas (2.1%) and other products (3.2%). According to the National Iranian Oil Refining and Distribution Company (NIORDC), which is part of the Iranian Oil Ministry, the capacities of the largest refineries are: in Abadan — 400 thousand barrels per day, in Bandar Abbas — 340 thousand barrels per day, in Isfahan — 375 thousand barrels per day, in Tehran — 250 thousand barrels per day, in Tabriz — 110 thousand barrels per day and in Arak — 250 thousand barrels per day.²⁹

It is planned to increase the output of petrochemical products to 133 million tons by 2026 (which corresponds to about USD  30 billion in monetary terms), including by increasing the production of ethane in the newly developed phases of the South Pars field and more active processing of associated gas. Iran also plans to build at least 8 new refineries and increase its oil refining capacity from  2.2 million to 3.5 million barrels per day, which will increase the output of petrochemical products from 90 to 100 million tons. The construction and modernization of petrochemical enterprises is being carried out within the framework of the “second leap” program for the development of petrochemistry.³⁰

Investments in the oil and gas industry

The production cost of Iranian oil ranges from USD 10 to 12.6 per barrel, falling below USD 1 per barrel in some fields. The main obstacle to attracting investments to the non-oil and gas industry is the constitutional regulation of the Islamic Republic of Iran, which bans foreign companies from owning the country's mineral resources. In the energy sector, foreigners cannot own property in any form, and the possibility of shared production is also excluded. No more than 25% of products can be produced with foreign capital, and no more than 35% in each sub-sector.³¹ It is not allowed to establish enterprises with 100% foreign capital. Only since 1995, foreign companies have been granted the right to conclude service contracts, known as “buy-back.” The terms of the BOT (build — operate — transfer) agreement  imply the gradual transfer of the facility  to the ownership of the Iranian customer  as the investor’s costs are reimbursed.  Since 2016, a “new oil contract” has been introduced, providing more benefits to foreign investors in terms of production and participation in product sales. Nevertheless, even under these conditions, foreign companies continue to operate within the Iranian oil  and gas sector (Keshavarz, Iranmanesh & Dehghan, 2021).

On October 4, 2017, LUKOIL Engineering LLC (Russia) and the National Iranian Oil Company signed a Memorandum of Understanding.³² In accordance with the document, the parties expressed interest in expanding their mutually beneficial cooperation for basin modeling and analysis of oil  and gas systems in the northwestern part of the Persian Gulf, the Abadan Plateau and the  South Caspian Basin (Ebrahimitorkaman,  2022, p. 129).

In 2019–2020, the OZGEO geological company developed two oil projects in Iran. The first project involved discovering oil fields in the coastal southwestern part of the Caspian Oil and Gas Basin. The aim was to identify shallow oil deposits near the Rasht — Astara railway within the framework of the North — South International Transport Corridor. The second project involved discovering oil fields within the completely unexplored Makran Gas Basin in southeastern Iran in the coastal part of the Gulf of Oman, within the framework of the North — South International Transport Corridor. However, the projects were never implemented due to a lack of investment.³³

In 2022, the Russian company Gazprom and NIOC signed a memorandum of understanding on cooperation between the companies. The projects are estimated to cost USD 40 billion and include the development of the Kish and North Pars gas fields, as well as the participation of the Russian side in the operation of the South Pars field. The possibility of cooperation in the construction of export gas pipelines is also under consideration.³⁴

Conclusion

The development of the oil and gas industry is one of the key elements of the industrialization policy pursued by the leadership of the Islamic Republic of Iran. The explored reserves make it possible to extract oil for another 95 years at the current production level. Developing oil supplies for foreign markets is crucial as this provides 40–50% of the country’s foreign currency revenues to the budget. The construction of eight new oil refineries will generate additional profits from the sale of refined petroleum products based on the processing of crude oil.

In this regard, Iran is extremely interested in developing transport corridors for the sale of its products. The North — South International Transport Corridor, for example, is interesting for Iran with oil supplies to Pakistan and India. At the same time, other minerals extracted from deposits near the corridor can also be supplied.

According to Russian experts, the technological re-equipment of the oil industry will ensure the recovery of more than 35% of oil and a significant increase in reserves due to the additional exploration of deeper horizons, which will increase exports of oil and petroleum products, mitigate the impact of the economic crisis caused by the embargo and sanctions, and give a powerful impetus to the country’s economic development.³⁵

In the future, lifting the embargo on Iranian gas exports will positively impact the development of Iran’s oil and gas industry, as stable gas supplies to India and Pakistan (not counting China and the Republic of Korea)  will provide a significant amount of foreign exchange earnings for Iran. Iran may  abandon the use of the euro in oil and  gas trade. Following the introduction of the oil embargo against Iran, the country began accepting payments for supplied oil in  the national currency of the importing  country, for example, in Indian rupees and Chinese yuan. In trade with its neighbors, Iran intends to use either the currency of these countries or its rial.

Iran sees a way out of this difficult situation, including in the development of cooperation within the framework of the BRICS international association, of which it became a full member in 2024. Iran is interested in developing cooperation within the framework of BRICS due to technological investments and international partnerships, especially with Russia, and it can become an impetus for the development of both North — South transport flows and the involvement of raw materials from oil and gas and other fields within the transit corridor in Iran.

By implementing an integrated approach to the development strategy of Iran’s oil and gas sector, a key element in building a “resistance economy,” the Iranian leadership is solving the main problem of diversifying the Iranian economy. At the same time, Iran’s energy diplomacy aims to build promising international partnerships and technological investments, which should ensure Iran’s positioning as one of the leaders in global innovative energy solutions. The development of a strategic dialogue between Iran and Russia, including in the oil and gas sector, strengthens their sovereign positions and indicates a shift towards the creation of a multipolar energy world. This step could also be a catalyst for reconfiguring global alliances and energy policies, with far-reaching implications for global energy security and geopolitics.

 

_{¹ Matne kamele sohanone Hassan Rouhani dar goftogue vije habary shabkee do cima. 1392, 7 hordad [Rouhani H. Speeches. Full Text] // IRIB News Agency. May 28, 2014. (In Persian). URL: https://web.archive.org/web/20130805120122/http:/www.iribnews.ir/NewsText.aspx?ID=1956802 (accessed: 04.07.2025).}

_{² In this case, energy diplomacy is recognized as a functional area of diplomacy related to ensuring energy security. The field of energy diplomacy includes the problems of international transit, the settlement of territorial disputes between countries over adjacent areas rich in energy resources, the delimitation of rights to offshore deposits, deals with the problems of investment and the development of large energy projects, etc. See: Krivoshapka I. Energy Diplomacy: The Most Important Tool of Politics or New Technologies of World Domination? // Energy and Industry of Russia. May 2016. No. 08 (293). (In Russian). URL: https://www.eprussia.ru/epr/293/3973053.htm (accessed: 04.07.2025).}

_{³ Matn sand nahaayi cheshm andaaz 20 saaleh jomhoori eslaami iraan [The Final Text of the Document “20-Year Development Prospects of the Islamic Republic of Iran”] // Isfahan University of Technology. (In Persian). URL: https://fav.iut.ac.ir/sites/fav/files/Files/SanadeCheshmandaz20Sale.pdf (accessed: 04.07.2025). More detailed planning was carried out for 5-year periods (2006–2010, 2011–2015, 2016–2020, 2021–2025). See: (Razavi & Pirani, 2022, рр. 174–176).}

_{⁴ Cheshm andaze jomhuri eslami iran dar ofogh 1404 hejri shamsi [The Vision of the Islamic Republic of Iran on the Horizon of 2025] // Meybod University. (In Persian). URL: https://meybod.ac.ir/userfiles/academic_research/files/academic_research_32.pdf (accessed: 05.06.2025).}

_{⁵ Smith G. Iran Oil Exports Creep Up as Trump’s Maximum Pressure Fades // Bloomberg. January 25, 2021. URL: https://www.bloomberg.com/news/articles/2021-01-25/iran-oil-exports-creep-higher-as-trump-s-maximum-pressure-fades (accessed: 15.06.2025).}

_{⁶ Farhange eghtesade moghavemati dar bayanat rahbare moazzame enghelabe eslami [The Culture of the Resistance Economy in the Speeches of the Supreme Leader of the Islamic Revolution] // Khamenei.ir. 2014. (In Persian). URL: https://farsi.khamenei.ir/speech-content?id=25365 (accessed: 04.07.2025).}

_{⁷ Ibid.}

_{⁸ Leader’s Speech on the Economy of Resistance in Meeting with Officials and Business Community // Khamenei.ir. March 11, 2014. URL: https://english.khamenei.ir/news/1882/Leader-s-Speech-on-the-Economy-of-Resistance-in-Meeting-with (accessed: 04.07.2025).}

_{⁹ Economic Orientation of Iran Must Divert from an Oil Economy: Ayatollah Khamenei // Khamenei.ir. August 26, 2017. URL: https://english.khamenei.ir/news/5082/Economic-orientation-of-Iran-must-divert-from-an-oil-economy (accessed: 04.06.2025).}

_{¹⁰ Sanade melli rahbord energy keshvar mosavabe 4/22/2016 heyatte vaziran [Document of the National Energy Strategy of the country, approved on 4/22/2016 by the Cabinet of Ministers, 1st edition]. 2017. (In Persian). URL: https://drive.google.com/file/d/1_sKI0SIJpLNLHj__320rCLUrKErWeQqe/view?usp=sharing (accessed: 06.06.2025).}

_{¹¹ Bayaniye jame dovome enghelab khatab be melate iran [Statement of the Second Step of the Revolution Addressed to the people of Iran] // Khamenei.ir. February 11, 2019. (In Persian). URL: https://farsi.khamenei.ir/message-content?id=41673 (accessed: 06.06.2025).}

_{¹² Gozareshe amalkarde yek sale vezarate nafte dolate sizdahom [Annual report on the work of the Ministry of Oil of the 13th Government]. 2021. P. 56. (In Persian). URL: https://drive.google.com/file/d/1nnTxQBPGN_Cv421wd_Q1YtMC8FL47VQA/view?usp=sharing (accessed: 01.07.2025).}

_{¹³ Khabar dar neshaste shanghai: Iran baraye ijade yek koridore teranziti faragit jahate etesale azaye shanghay amadegi darad [Informant at the Shanghai Meeting: Iran Is Ready to Create an All-Encompassing Transit Corridor to Connect Shanghai Participants] // Tabnak. October 26, 2023. (In Persian). URL: https://www.tabnak.ir/0052Mx (accessed: 01.07.2025).}

_{¹⁴ Khabar dar neshaste shanghai: Iran baraye ijade yek koridore teranziti faragit jahate etesale azaye shanghay amadegi darad [Informant at the Shanghai Meeting: Iran Is Ready to Create an All-Encompassing Transit Corridor to Connect Shanghai Participants] // Tabnak. October 26, 2023. (In Persian). URL: https://www.tabnak.ir/0052Mx (accessed: 01.07.2025).}

_{¹⁵ Barname vazarate nafte dolate chahardahom (1403–1407) [Program of the Ministry of Oil of the 14th Government (2024–2028)]. 2024. P. 5. (In Persian). URL: https://media.shana.ir/d/2024/08/15/0/439488.pdf?ts=1723733927000 (accessed: 04.06.2025).}

_{¹⁶ Pirzade A. Iran va diplomasi enerjhi [Iran and Energy Diplomacy] // Iranian Diplomacy. October 15, 2024. (In Persian). URL: http://www.irdiplomacy.ir/fa/news/2028783/%D8%A7%DB%8C%D8%B1%D8%A7%D9%86-%D9%88-%D8%AF%DB%8C%D9%BE%D9%84%D9%85%D8%A7%D8%B3%DB%8C-%D8%A7%D9%86%D8%B1%DA%98%DB%8C (accessed: 14.06.2024).}

_{¹⁷ Iran’s Oil Exports Break Five-Year Record // Neftegaz.RU. July 6, 2023. (In Russian). URL: https://neftegaz.ru/news/Trading/786111-neftyanoy-eksport-irana-pobil-pyatiletniy-rekord-/ (accessed: 21.12.2023).}

_{¹⁸ Ibid.}

_{¹⁹ Szczesniak P. A. The Mineral Industry of Iran // 2019 Minerals Yearbook : Iran [Advance Release]. U.S. Department of the Interior U.S. Geological Survey. July 2023. URL: https://pubs.usgs.gov/myb/vol3/2019/myb3-2019-iran.pdf (accessed: 21.12.2023).}

_{²⁰ Oil Exports from Iran // Tadviser. 2023. URL: https://www.tadviser.ru/index.php/Статья:Экспорт_нефти_из_Ирана?ysclid=lq25lxvbmb426253617 (accessed: 21.12.2023).}

_{²¹ For the 4th Month in a Row, OPEC Has Not Changed Its Forecast for Global Oil Demand Growth in 2023 // Neftegaz.RU. June 14, 2023. URL: https://neftegaz.ru/news/finance/783314-opek-4-y-mesyats-podryad-ne-menyaet-prognoz-po-rostu-sprosa-na-neft-v-mire-v-2023-g / (accessed: 04.06.2025).}

_{²² Barname vazarate nafte dolate chahardahom (1403–1407) [Program of the Ministry of Oil of the 14th Government (2024–2028)]. 2024. P. 5. (In Persian). URL: https://media.shana.ir/d/2024/08/15/0/439488.pdf?ts=1723733927000 (accessed: 04.06.2025).}

_{²³ Calculated by V.I. Belov.}

_{²⁴ World Energy Review 2023 // Eni. URL: https://www.eni.com/assets/documents/eng/topic/global-energy-scenarios/world-energy-review/2023/WER_2023.pdf (accessed: 21.12.2023).}

_{²⁵ Barname vazarate nafte dolate chahardahom (1403–1407) [Program of the Ministry of Oil of the 14th Government (2024–2028)]. 2024. P. 5. (In Persian). URL: https://media.shana.ir/d/2024/08/15/0/439488.pdf?ts=1723733927000 (accessed: 04.06.2025).}

_{²⁶ Umarov T. Friendship for Influence. How Russia and China Get Along in Central Asia. Washington: Carnegie Endowment for International Peace*, 2024. URL: https://carnegie-production-assets.s3.amazonaws.com/static/files/Umarov_China%20Russia%20Central%20Asia-RU-2.pdf (accessed: 12.12.2024).}

_{*The activities of the international non-governmental organization Carnegie Endowment for International Peace have been recognized as undesirable on the territory of the Russian Federation (Editor’s note).}

_{²⁷ Bahrami A. Shahkare diplomaciye enerzhiye dolate raeisi [The Masterpiece of Energy Diplomacy of the President’s Government] // Tahririeh Studies Institute. 2023. (In Persian). URL: www.tahririeh.com/news/25793/ (accessed: 04.07.2024).}

_{²⁸ Asali M. Karname dolate Rouhani dar diplomasiye enerzhiye naft [Rouhani Administration’s Effectiveness in Oil Energy Diplomacy] // Darayan. 2016. P. 1–5. (In Persian). URL: https://daraian.com/fa/govern/8570 (accessed: 30.06.2024).}

_{²⁹ Oil Exports from Iran // Tadviser. 2023. URL: https://www.tadviser.ru/index.php/Статья:Экспорт_нефти_из_Ирана?ysclid=lq25lxvbmb426253617 (accessed: 21.12.2023).}

_{³⁰ Iran’s Oil Refining Capacity Will Grow by 50% over the Next 3–4 Years // Neftegaz.RU. September 17, 2021. (In Russian). URL: https://neftegaz.ru/news/neftechim/697369-neftepererabatyvayushchie-moshchnosti-irana-vyrastut-na-50-za-sleduyushchie-3-4-goda/?ysclid=lq2eim13nk817677930 (accessed: 04.06.2025).}

_{³¹ Iran // Mineral.ru. (In Russian). URL: https://www.mineral.ru/Facts/world/116/140/index.html (accessed: 06.06.2025).}

_{³² LUKOIL and the National Iranian Oil Company Signed a Memorandum of Understanding // LUKOIL. October 4, 2017. (In Russian). URL: https://lukoil.ru/api/presscenter/exportpressrelease?id=155990 (accessed: 06.06.2025).}

_{³³ Pichugin S. V. Iran’s Oil and Gas Sector : A Report by the OZGEO Exploration Company. 2023.}

_{³⁴ Zhiltsov S. The Specifics of Russia’s Cooperation with Iran in the Energy Sector // Nezavisimaya Gazeta. November 7, 2022. (In Russian). URL: https://www.ng.ru/energy/2022-11- 07/14_8583_cooperation.html (accessed: 20.06.2025).}

_{³⁵ Pichugin S. V. Iran’s Oil and Gas Sector : A Report by the OZGEO Exploration Company. 2023.}

About the authors

Vladimir I. Belov

RUDN University

Email: yurtaev-vi@rudn.ru
ORCID iD: 0000-0001-6112-5550
SPIN-code: 4552-2182

Dr.Sc. (History), Professor, Professor, Department of Oriental and African Studies

10-2 Miklukho-Maklaya St, Moscow, 117198, Russian Federation

Sergey V. Pichugin

OZGEO Company

Email: svpichugin2103@mail.ru
ORCID iD: 0009-0002-4756-3858

Chief Geologist

33 Starokonyushenny Lane, Moscow, 119002, Russian Federation

Daniyal M. Ranjbar

RUDN University

Author for correspondence.
Email: randzhbar_meshkin_d@pfur.ru
ORCID iD: 0000-0002-1619-3383
SPIN-code: 5294-1502

PhD (History), Assistant Lecturer, Department of Theory and History of International Relations

10-2 Miklukho-Maklaya St, Moscow, 117198, Russian Federation

References

Supplementary files