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 chan ges 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.